ifo President Clemens Fuest warns of a global economic crisis if protectionist trends continue to rise.

The President of the Munich-based ifo Institute, Clemens Fuest, has issued a stark warning that the world economy could face a crisis if the current protectionist tendencies continue to grow. In an interview with the Süddeutsche Zeitung, Fuest said, “Unfortunately, we cannot rule out such a scenario.”

The US alone could not plunge the global economy into a crisis with its tariff policy, but a dangerous dynamic could arise if it combined with growing protectionism in China and Europe.

“If everyone goes in the wrong direction, it could lead to a major crisis”, said Fuest.

He sees the current economic policy climate as “a warning signal for the whole world”. Particularly worrying is the dependence on the American financial and technological system. “Two-thirds of the world’s stock market capitalization is on the American stock market, and the dollar is the world’s anchor currency. If all that were to change, the consequences would be incalculable,” warns the economist.

Europe’s extreme technological dependence on the USA

Fuest also emphasizes Europe’s technological dependence on the United States: “We are completely dependent on the Americans not only in terms of security policy, but also when it comes to essential functions, especially in the area of digital services. We would have major problems in the event of a serious conflict with the Americans. The lights would go out here.”

This warning is also taken up by the well-known business blogger Emanuel Boeminghaus on X (formerly Twitter):

“If the Americans switch off the Windows systems, the Oracle databases, the Salesforce CRM systems, the Office 365 packages…, then, above all, this will kill any communication – especially via teams and e-mail. Then Mercedes, BMW, RWE, E.ON, Uniper, Allianz and Munich Re can just as well shut up shop. Then nothing will work at all.”

Boeminghaus warns that a migration to alternative, non-US IT systems is conceivable, but currently hardly feasible. “A precautionary migration would take at least five years for a DAX-listed company – if there were enough alternatives at all.”

Fuest also warns of a possible loss of trust in the financial markets: “When governments behave in a completely erratic and destructive manner, money and trust are withdrawn from them. Financial markets are very fast: when trust collapses, every investor knows that they have to be the first to get out. This can lead to dangerous runs with unforeseeable consequences.”