ISA Monthly Issues to Watch - September 2025
The Pressure is On Ukraine
Ukraine is facing increasing pressure, both on the battlefield and in the field of diplomacy, in the wake of the recent summit between United States President Donald Trump and Russian President Vladimir Putin. While Ukraine has secured the support of most of Europe’s leading powers, it will need the continued support of the United States to withstand growing Russian pressure along the front lines in Ukraine and in the skies over that country. This is because Russia’s grinding ground offensive and its relentless missile and drone attacks are wearing down Ukrainian defenses, albeit at great cost to Russia. This month will be critical as Russia moves to win control of the strategic town of Pokrovsk and to win over the United States to its position concerning Russian demands with regards to an end of the conflict.
Are We Headed for a Global Slowdown?
The economic results for the second quarter of this year that were released over the past few weeks were a little better than expected, particularly in the United States, China and India. However, signs of an impending slowdown have emerged of late. For example, consumer and business confidence levels remain on shaky ground due to widespread uncertainty over economic and monetary policy in the United States and elsewhere. At the same time, rising tariffs from the Trump Administration have resulted in major disruptions to global trade. As a result, many economists are forecasting an economic slowdown for most of the world’s leading economies in the second half of this year, and they will be closely watching for signs of this slowdown in this month’s economic data releases.
India Forced to Reorient its Politics and its Economy
Until this year, India had been enjoying a run of good political and economic fortune. However, 2025 has been a very difficult year for the world’s most-populous country. First, India’s armed forces performed more poorly then expected in a brief conflict with long-time rival Pakistan. Second, India’s moves to strengthen relations with the United States were thwarted by the Trump Administration’s decision to impose harsh tariffs on India and its efforts to restore stronger ties with Pakistan. This is forcing Prime Minister Narendra Modi to move to rebuild India’s fraught economic and political relationship with China, while reinforcing India’s ties with the “Global South”. So far, the Indian economy has weathered this storm, but this could change in the months ahead.
Government Control of Key Economies
One of the defining characteristics of the 21st century has been the rollback of government control over the economy. For much of this century, the market was allowed to flourish with relatively little government interference. However, major crises such as the Global Financial Crisis and the Covid-19 pandemic forced governments to intervene to save their economies. Now, governments are taking an even greater role in managing the economy. This is happening in countries where such government control would be expected, but is also happening in places such as the United States, where the Trump Administration is stepping up its efforts to dictate economic and monetary policy. If support for protectionist economic policies continues to grow, more governments may take steps to take greater control of their countries’ economies.
Europe on the Defensive
Europe finds itself on the defensive, both politically and economically. During the recent summit between the United States and Russia, Europe felt helpless, even as it gathered to support Ukraine. Efforts to increase the level of unity in terms of foreign affairs among Europe’s leading powers have not increased Europe’s global influence, even as many European countries move to dramatically increase their defense spending. Economically, Europe is also on the defensive. A run of poor economic results stretching back more than 15 years has actually worsened in recent years. Likewise, as a regional economy that is dependent upon access to export markets to generate growth, the impact of rising isolationism and protectionism on the European economy could be very significant.
Is Productivity Growth Increasing?
With most major economies realizing a dramatic decline in population growth, and with trade and investment growing at a much slower pace than in previous decades, the only way most economies will be able to generate higher rates of economic growth will be through higher rates of productivity growth. However, for most major economies, productivity growth rates have been trending downwards for decades. Now, the spread of artificial intelligence (AI), automation and other new technologies is raising hopes that productivity growth will begin to rise. Already, there has been some positive productivity news from the United States in recent months. As these technologies spread, other economies will also hope to benefit in the form of higher rates of productivity growth.