There is a danger that leaders persuade themselves of a “global mood” at the World Economic Forum (WEF) Annual Meeting in Davos, and then spend the year trying to prove it. But I think “nervously optimistic” best describes how delegates felt. Rarely have we seen attendees so divergent in their outlook. US investors and business leaders were charged with animal spirits, while acknowledging the many unknowns. Europeans generally were concerned about their economies, red tape, and lack of innovation. Gulf States vibrantly championed energy, both traditional and transitional, and artificial intelligence (AI). The Chinese delegation was notably small. And developing nations were clearly eager to jump on the US optimism while also keen to emphasize their ability to manage both eastward and westward.

Here are my five key thoughts and takeaways from Davos 2025:

1. US economic confidence influences global markets as Europe faces challenges

US corporates are realigning their priorities fast. Their confidence means they are adding new initiatives while they assess what the initial moves of the Trump administration could mean for each of them.

If not quite as exuberant, we saw similar optimism from the biggest emerging economies such as India, Indonesia, South Africa, Brazil, and Nigeria.

In our CEO panel on business transformation featuring Takeda’s Christophe Weber, Pearson’s Omar Abbosh, State Street’s Ronald O'Hanley, NYSE Group’s Lynn Martin, and Mercer’s Pat Tomlinson, we debated the biggest levers available to drive change and heard diverging views on the pace of transformation in different regions.

In contrast to the US confidence, there was widespread concern about the continued weakness of large European economies, which are losing ground to the United States in productivity and technological innovation and to China in manufacturing competitiveness. Many reflected that Europe needs a wake-up call on sclerotic regulation, and while the Draghi report, authored by former European Central Bank President Mario Draghi, was gaining traction for its ambitious proposals to reform the European economic model, few seemed to think that the crisis was yet big enough to mobilize sufficient near-term change.

2. Understanding the reach of tariffs and inflation consequences

Policymakers the world over are rethinking how to use their levers to manage the economy. “Modern mercantilism” emphasizes national security, self-reliance, and the strategic importance of some sectors. This is a painful paradigm shift for many.

Tariffs are the most conspicuous example of this approach — and were the talk of Davos — but the strategy extends to a broader array of measures aimed at curbing trade deficits, reinforcing domestic industrial bases, and safeguarding national champions.

As we heard in our joint event with the WEF on supply chains, the view was that we would more likely end up with “surgical tariffs” than broad-based ones, but most are planning for a wide range of scenarios. More broadly, much of the debate in Davos this year focused on the extent to which the shift toward more tariffs and migration management in many western countries could reverse the gains made in taming inflation. In our joint investment breakfast with Mercer, we heard several large investors outline just how difficult this makes it to position portfolios.

3. Global AI trends highlight national policies and corporate strategies

AI was in almost every conversation this year, and in a pleasant change to the last two WEFs, the discussion was rooted in real experience and understanding.

There are no longer kudos points for knowing what a hallucination is. This year, AI agents were the overused talk of the town, along with the challenge companies face in bringing workforces along as technology develops more quickly than humans can acquire new skills. A plethora of announcements from both the US and the Middle East were in full swing during the week, shaping the conversation. Government and policymaking representatives were keen to emphasize that they were keeping up with the pace of the technology.

AI was the most prominent battleground in the rising geopolitical tensions. Corporates were vocal in their fears that nationalistic structures and restrictions on chips, data, cloud, and AI models could severely hamper progress in the coming decades for anyone operating globally. Given that compute is energy, AI development will continue to be impacted by geopolitics and national energy policies.

Despite the deafening noise and optimism around AI, it was often noted that we remain largely in a period of foundation setting and experimentation. While many firms hope for 15-20% productivity gains in the near to medium term, we are still in the early days of the AI revolution. One person likened it to having developed copper wire but not yet inventing the light bulb. Much like the industrial revolution, the social ramifications will likely take two generations to fully grasp. While the potential is enormous, the conversation this year was more pragmatic and grounded, with executives sharing notes about how they’re integrating use cases into their company operations.

4. The role of finance in the energy transition and market dynamics

The big shifts shaping the future of finance were hotly debated by Norges Bank Investment Management CEO Nicolai Tangen and Bridgewater Associates Co-CIO Karen Karniol-Tambour, co-speakers at our annual Financial Services lunch.

US banks are very much back, freshly emboldened by a terrific 2024 and the prospect that the Basel III endgame rules will be rolled back, freeing up a significant amount of surplus capital to invest in further growth and market share gains.

Whether emboldened banks will be better able to fend off private credit was a hot topic. The dramatic shift in the credit landscape continues with the leading private credit players striking out for greener pastures and new asset classes to compete for.

Meanwhile, the finance system as a whole is reassessing its role in the energy transition. There was a dose of realism that finance players can influence their clients but cannot drive transition faster than either government policy or public opinion allows.

5. Corporate strategies for health and demographic solutions

A smorgasbord of demographic and health themes were prominent for me this year. The importance and difficulty of solving the health implications of climate change was the subject of some important Oliver Wyman work with the WEF. Life sciences, health, and charitable leaders discussed how to reduce the 2 billion disability-adjusted life years that we believe will be impacted — public-private collaboration appears key.

Meanwhile, a great session on the fast-changing world of sport, both elite and participatory, coupled with increasing discussion of the harms of ultra-processed foods, gave me hope that general health trends may be poised to turn a corner, even without the assistance of semaglutides.

Quietly, out of the limelight, was a return to addressing the smoldering demographic challenge. Societies’ age structures are inverting, and half the world’s major economies face shrinking workforces — but it seemed impossible to have a deeper conversation without touching on immigration, which remained taboo.

The immediate pressure for corporate leaders comes with five generations coexisting at work, with very different digital fluency, expectations, and skills. The one discussion in this space that was fully formed was how organizations need to rethink collaboration, innovation, and productivity.

Davos 2025 highlights the importance of building trust and resilience

Wherever one stood on the level of optimism, Davos this year reflected the fascinating and unnerving state of the world today. A vital theme from previous years that I found too quiet in the 2025 formal agenda (though present in private conversations) was trust in institutions and in the corporate world. With trust in leaders seemingly at an all-time low, we need more introspection on how to care for and renew the social contract. Alongside all the fascinating issues mentioned above, I believe that the confluence of political, corporate, charitable, and philanthropic mindsets gives us a chance to address these trends. However, ambition and resilience, delivered with rigor and care, will be my watchwords in 2025 and beyond.