Trusting in the power of the US economy

Every BRICS summit ignites a debate on the future economic dominance of the US. Are we witnessing the end of the US dollar’s reign as the main global currency? Is China taking over trade globally? And, more importantly, will this potential change impact the status of the US as the leading power in the world? While everyone holds their breath and looks at an election process that puts in doubt the core US institutions, the next few years are clearly likely to be a key juncture for both America and the world.

There is no doubt that countries in the East and Global South are becoming more prominent in the global economy. And this trend will undoubtedly continue. It is also clear that China is becoming the main trading partner of many regions outside the Western Hemisphere. Yet, despite these trends, the US dollar remains the dominant currency in the world. And the US is still the dominant positive force.

Indeed, roughly half of global trade is still invoiced in US dollars. The currency accounts for 60 percent of global foreign exchange reserves, 40 percent of global payments and 50 percent of all international debt. It has maintained its share mostly by sidelining the euro. For example, SWIFT transactions, which exclude several countries due to sanctions, show that the US dollar’s involvement in transactions increased from 42.5 percent in August 2021 to 60 percent in July 2024, while the euro shrank from 39.5 percent to 12.4 percent over the same period.

Despite the rise of the BRICS nations, there is greater trust in the US dollar and the US economy than any of their rivals

Khaled Abou Zahr

This is only a partial element, but it symbolizes the trend. There is no doubt that the war in Ukraine and the stability of the eurozone have played big roles in this shift. Yet, despite sanctions and the inevitable rise of the BRICS nations, there is greater trust in the US dollar and the US economy than any of their rivals. And this maintains the US’ geopolitical dominance. America still stands as a free economy that offers greater innovation and transparency than other regions. I would also add the power of the US military as a key element in the outsized role of the US dollar and, consequently, the country’s global economic impact.

More broadly, what has an impact is the outlook of the economy, its dynamism and its access. So, while the US has been exhibiting a lack of trust on the governmental level in recent years, most of the world’s innovation has come from its private companies. I also believe that the resilience sector, focused on defense, security and space, has continued to build trust in the future of the US and thus its continued capacity to lead, if not dominate.

The development of a new type of US innovation is helping maintain its symbolic geopolitical supremacy. The most obvious examples are Tesla and SpaceX. The recent advances in Tesla’s driverless cars, the successful Starship mission and the global demand for SpaceX’s Starlink satellites showcase how American innovation strengthens its global influence. It is no longer the American government but its private companies that are leading this influence. Together, these technologies reflect a US strategy that leverages innovation for resilience and strategic power worldwide.

Other companies are also contributing to this new global leadership. Palantir, Anduril Industries, CrowdStrike and Varda Space Industries, to name just a few, are bringing innovation to the resilience and deep-tech sectors and are keeping the US at the forefront. This trickles down to many other sectors, positioning the US as the world’s most innovative country. It is also clear that the power of these companies has at its root the support of the US government. Yet, they are answering the needs of many countries in terms of security and defense and hence positively impacting the US’ global standing.

The country’s high debt levels and a rising fiscal deficit pose a genuine risk to its global standing

Khaled Abou Zahr

It is also worth mentioning that the US’ share of global gross domestic product has increased in the past 13 years, from 21.1 percent in 2011 to an estimated 26.3 percent in 2024. This growth keeps increasing the trust in the US and its capacity to consistently adapt and transform. It is a translation of its free market principles and free international access, which also support the country’s global standing. The capacity to access and invest in this level of innovation is unmatched. As a direct reference, most of the innovation in China, which is also impressive, is not accessible to investors and its use is reserved for China. The exact opposite is true for the US. For example, an international investor can invest in SpaceX (although there are conditions) and Starlink can be used globally. This is power and trust because transparency beats opacity.

There is no doubt that the US’ positioning has many future risks. Most prominently, the country’s high debt levels and a rising fiscal deficit pose a genuine risk to its global standing. Its debt is approaching 100 percent of GDP and interest payments made up 13 percent of federal spending in 2024, surpassing defense spending to become the third-highest category. This will limit the resources available for key investments in infrastructure, defense and innovation.

Moreover, the approach of printing money to get out of debt presents a risk that can erode confidence in the US economy, weakening the dollar’s role as the global reserve currency and diminishing America’s geopolitical influence. Some countries are already hedging against that risk, as revealed by their gold purchases and other diversification methods.

This is why the next US president will need to bring about a true shift and unleash the country’s unmatched innovation capacity and dynamism, instead of relying on artificial methods such as the concept that there is no better place today. I will therefore not bet against the US as long as it stays true to its principles of freedom, liberty and light regulation, wrapped up with true meritocracy.

• Khaled Abou Zahr is the founder of SpaceQuest Ventures, a space-focused investment platform. He is CEO of EurabiaMedia and editor of Al-Watan Al-Arabi.