If the big macro subject of 2024 centred around half of the global population heading to the polls, the foremost theme for 2025 is likely to be the implications of those elections. While newly elected leaders make pledges to grow their economies, the harsh reality is that an increasingly polarised geopolitical landscape will continue to create difficult conditions for businesses around the world.
By now, leaders should be accustomed to this volatility, with the best being able to not only adapt to a fast-moving environment, but also take advantage of it to drive growth. Criticaleye spoke to Members of its global Community to find out the key trends and watchpoints that will shape 2025.
Here’s what they said:
US trade protectionism to support domestic growth at the expense of China-dependant economies
There are two themes that I would highlight when it comes to the outlook for the global economy in 2025. The first one being that in the UK, and quite possibly in the US as well, recent political events mean fiscal policy will be looser than previously seemed likely.
In the UK [Autumn] Budget, for example, the Chancellor announced that day-to-day spending will rise by more than four percent in real terms next year, and investment spending by ten percent. That additional demand is a potential support for near-term growth. But it also adds slightly to upside risks for inflation and the possibility that interest rates remain higher for longer. Rates are likely to fall a little bit further from here, but certainly not to return to anything like [the levels seen in the last 15 or so years.]
The second big theme is the environment for global trade becoming more difficult following the Republican sweep at the US election. So, while you've got that potentially stronger demand at home from the US and UK, economies in parts of Europe – Germany in particular – that are very exposed to the global manufacturing cycle and have closer ties to China, will face continued challenges.
China itself continues to face significant headwinds, both the threat of trade tariffs from the US and its own domestic problems resulting from the overhang of its bursting property bubble. Despite the authorities there providing some more support recently, the domestic economy is likely to remain weak by historical standards.
Trump’s election will have foundational implications, from global trade to climate change
When I analyse the geopolitical context, I use a three-part framework that starts with issues that have foundational impact, moves to those with systemic consequences and then to events or situations with local implications. This ensures you can distinguish between the signal issues that move the needle for your business, and the noise.
The Trump election is foundational – it will have global consequences affecting many arenas in complex ways from supply chains to trade, economics, the environment and energy and security in Europe, and beyond. It will have implications for global relationships and institutions and will relax current standards and norms – and the regulatory environment which guides them – with significant implications for the private sector.
At the systemic level, the trend towards regionalisation will continue. Climate change and energy access are also in a state of flux. And at the local level, humanitarian crises, wars and environmental events are affecting life and business in intense but often more geographically restricted ways.
The businesses that are going to be most successful in this context are the ones who are able to live with the volatility. Who are agile, flexible and are able to not just manage it, but also find ways to take advantage of it [volatility]. If you're a global company, you will have to act local wherever you're operating. Some companies are creating localised supply chains to manage a possible reality in which you cannot operate effectively in the US and in China at the same time, and instead need to have two separate businesses. There isn’t a ‘one size fits all’ solution. However, the best companies will both integrate geopolitical thinking into their business decisions and iterate regularly.
Looser fiscal policy from newly elected governments to fuel higher inflation
What is clear from the elections [of 2024] is that incumbents are facing the wrath of their respective electorates for high prices, growing income disparity, lack of employment opportunities and resultant anger towards immigration, and a general lack of confidence that those in power have the answers. Consequently, the new administrations will focus on jobs, jobs, jobs! Steps taken will include, assuming central banks in the respective countries are aligned, reduction in interest rates, increasing money supply and increased government spending. And yes, also addressing immigration – legal or otherwise.
Unfortunately, there is a fundamental disconnect—these factors typically fuel inflation. Immigrants in the US support the vast agricultural sector. Lack of adequate farm hands will create supply chain issues and impact availability and prices. Climate change is real and I expect, apart from the US, governments will be more active in addressing this.
While the Russia-Ukraine and the Middle East wars have impacted global sentiment, oil prices have been stable. This is thanks to the US now taking pole position in hydrocarbon production and a slowdown in China, combined with rapid green energy deployment there. This leaves India as the significant consumer of imported oil.
Political alliances have already moved on with a thaw in Indo-Chinese relations and a distancing between the US and Europe. Even Canada and Mexico are watchful and preparing for the unexpected.
Initially, [it] looks like the US will be the main engine for global growth, followed by India and other Asian economies. China will remain a manufacturing and export powerhouse. The government there will continue to push the huge export machine—[the] exports to GDP ratio has steadily increased in China over the past year.
Marcus Stuttard, Head of AIM and UK Primary Markets, London Stock Exchange Group:
Greater stability in the UK to give a platform for more active capital markets
The UK is going through the biggest capital markets reform agenda for probably three or four decades. That includes a complete rewrite of the Main Market listing rules. It involves a fresh look at pension fund allocation and how institutional investors can back the domestic economy to a much greater extent.
I think the Main Market listing rule changes that were introduced in the summer have already started to drive the mid and larger-cap pipeline, and we've seen some international companies like Canal+ commit to listing in London rather than Paris. And part of that is a result of the changes we've seen.
In addition to the reform agenda, we have a greater element of political certainty and there's a lot of other very positive momentum that is driving the pipeline. As we look at it, we are expecting the pipeline for IPOs to grow into next year. We're certainly having conversations with the advisory and private equity community about exits onto the public market.
There is more political certainty in the UK and if you look at some of the uncertainty elsewhere globally, I think the UK probably looks like a more stable environment with some better underlying drivers.
Strong leadership will continue to differentiate in a tight market
Global economic growth is driven mostly from the largest markets. The US and China are the bigger elements of the global economy, and I think both have a good chance of having a more positive year than many economies within Europe do.
The expectation in the US is that President Trump is going to deliver this amazing growth engine. So ultimately, any tariffs have got to unlock growth within America, otherwise he's going to be in trouble. The real question is the inflationary pressures that I think the tariffs will drive up. So, the spill out – and the danger in Europe, for example – is you don't have the growth, but you still have the inflation.
My gut feeling is China will be relatively positive as it is investing at the moment. I think the broader Asian environment will be relatively positive. I think US economic growth will be okay, but it’s inflation that will be high. Europe has a more difficult, murky period ahead.
To succeed in this period, you need much stronger, dynamic leadership that gets ahead of the trends. I think you will see acceleration on mergers for the reason of taking costs out / centralisation. From a capital perspective, ironically, a tighter market creates more opportunities, because the differential between good and bad becomes more obvious. Bad organisations can't raise anything, whereas capital actually flows into good ones. In some ways, it’s a little bit more Darwinian, and that's the positive. If you're a well-run business, you'll do very well. If you're not a high-performing business, I think you'll be in trouble.
 (002).png "Palo Alto Networks"){kind=logo}
