New Year 2026 - where to now from 2025

                                                                                              Shutterstock

2025 has proven no less controversial, confronting and difficult than the year before, across many aspects of life and throughout the world. In many respects, 2025 seemed like the beginnings of a dystopian Orwellian alternative reality. What will 2026 be like for Australia and internationally ?

• Politics: politics across the world has veered towards a strong Right-wing influence with notable exceptions in the United Kingdom and Australia. It has not been a uniform trend however and political parties of the Right have not been able to gain majorities in many countries but only to become larger and in some cases the largest amongst multiple other groups. In 2026 the election to watch is the mid-term election for the Congress in the United States which will indicate the level of support that Trump and the Republican Party may or may not have. In Australia there are no federal elections for 2026. There are a state elections for Victoria and South Australia.  

• Economics: The World and individual country economies continue to grapple with inflationary pressures while simultanesoulsy dealing with trade instability due to the tariffs introduced by US President, Donald Trump. The Chinese economy in contrast has a different problem caused by the slow burn implosion of its property development sector which has created ripple effects including dampening local consumer demand. Europe is effectively marginal growth at 0.3 to 0.4% but is relatively stable in comparison. Stagflation is a genuine risk in the United States. Australia has inflationary pressure and the cash interest rate has been held at 3.60% by the Reserve Bank of Australia.

• Environment: the latest Council of the Parties (COP30) to the United Nations Framework Convention on Climate Change (UNFCCC) held in Brazil made some progress but overall was underwhelming. A key focus on the use of fossil fuels and their phasing-out was not achieved. This was a major failure of COP30 with severe ramifications for the next few years.  CO2 emissions are now likely to consistently be above the 1.5C temperature increase which was a target of the Paris Agreement. For Australia this means increasing heatwaves and floods. 

• Technology: The sudden explosion of new Artificial Intelligence (AI) software has been a feature of 2025 bringing with it both the risk of an economic bubble in investment markets, and a new industrial revolution. The last information technology investment bubble (the .com crash) occured with the development of the knowledge economy in the late 1990s to early 2000s. The use of the new AI capability is already starting to be apparent in the employment market but is yet to fully take-off. As Australians are often early adopters of technology it can be expected that effects will be seen in this country over the next two to three years.

• Wars and conflict: The Russia-Ukraine war currently drags-on, in an endless war of attrition. Although there have been continuing announcements of 'progress towards peace', nothing has actually eventuated. Russia at Putin's direction continues to launch daily drone and missile strikes with Russian ground forces continuing to grind their way in the Donbas and adjoining oblasts. The Israel-Gaza/Hamas conflict has declined following a cease-fire and allowance of aid into the strip however the peace remains tenuous at best and could escalate at any time. Numerous other conflicts continue in Sudan, Myanmar and Yemen. In 2026, this will continue to be the situation. As Australia provides military support to Ukraine, it is likely that this support will continue to be needed until, and if, a ceasefire or peace is achieved. 

 Happy new year !

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