What lies ahead for the global economy in 2025? | Counting the Cost

Summary

In this episode of 'Counting the Cost,' Adrien Finigan explores the global economic outlook for 2025, discussing inflation, geopolitical tensions, and the potential impact of President-elect Donald Trump’s trade policies. Experts analyze the ongoing battle against inflation, with a focus on energy prices and their stability in 2025. They delve into the challenges facing China’s economy, the risks of deglobalization, and the sluggishness of Europe’s growth compared to Asia and the U.S. The discussion highlights the uncertainty ahead and the transformative shifts in globalization and trade dynamics.

Takeaways

• 😀 The global fight against inflation has largely been won, with inflation expected to fall to 3.5% by the end of 2025.
• 😀 Despite geopolitical tensions in the Middle East, energy prices have remained subdued, though they may rise depending on oil supply disruptions.
• 😀 China is facing deflation, which could present a significant challenge to its economy in 2025, especially with a slowing real estate market and debt crisis.
• 😀 The US economy remains strong, but the potential for trade wars, particularly with China, could disrupt global markets in 2025.
• 😀 President-elect Donald Trump's policies could escalate trade wars, including threatened tariffs on Chinese goods and other countries, potentially destabilizing global trade.
• 😀 The EU is at risk of falling behind China and the US in terms of competitiveness, largely due to internal political and economic challenges, particularly in Germany and France.
• 😀 The possibility of a global trade war in 2025 could lead to higher tariffs, disrupting supply chains and increasing costs for consumers and businesses.
• 😀 A potential tariff war could severely impact European and Asian economies, particularly for countries reliant on exports like the UK and low-income nations in Africa.
• 😀 While energy prices are expected to remain stable or even decrease in 2025, slower economic growth in China and Europe, coupled with stable oil supply, should prevent major price hikes.
• 😀 Asia is expected to continue its economic growth, with biotech, renewables, and AI leading the way in sectors that will drive future economic advancements.
• 😀 Globalization is undergoing a significant transformation, shifting towards more regional cooperation in Asia, while multilateralism and global cooperation are rapidly collapsing, increasing systemic risks.

Q & A

What is the primary focus of the global economic discussion in 2024 as presented in the script?

The discussion in 2024 centers around the global fight against inflation, geopolitical tensions, particularly in the Middle East, and the economic slowdown in China. Experts analyze how these factors are influencing inflation, growth, and trade across the world, with a focus on the implications for 2025.

What role does the price of oil play in the global economic outlook for 2025?

The price of oil is a key factor in determining inflation and energy costs globally. Despite geopolitical tensions, particularly in the Middle East, oil prices have remained subdued in 2024. However, experts warn that if tensions escalate, especially between Iran and Israel, oil prices could rise, potentially reigniting inflation.

What challenges does China face in 2024, and how are they impacting its economy?

China is grappling with a deflationary economy, a slump in the real estate market, a debt crisis, and underconsumption. These challenges have led to weaker economic growth, with 2024 growth expected to be around 4.8%, below Beijing's 5% target. These factors are slowing the country's recovery and raising concerns about its global economic impact.

How do the geopolitical risks in Gaza and Ukraine affect global economies, according to the experts?

The ongoing conflicts in Gaza and Ukraine have created significant geopolitical risks, leading to disruptions in trade and supply chains. While Asia has shown resilience with strong growth rates, Europe and the US face challenges due to rising risks in trade and geopolitical instability, which could potentially lead to a global economic slowdown in 2025.

What potential impact could Donald Trump's policies have on global trade in 2025?

Donald Trump's threatened policies, including new tariffs and trade wars, particularly with China, could disrupt global trade. His proposal for a universal tariff on all countries, along with the threat of imposing a 10% tariff on Chinese goods, could lead to higher costs and trade fragmentation, potentially escalating tensions and reducing global cooperation.

What are the economic prospects for the European Union in 2025, and why are they concerning?

The EU faces slow growth and political challenges in 2025, particularly with powerhouse economies like France and Germany experiencing downturns. Despite efforts to implement fiscal policies, the EU risks falling behind China and the US in competitiveness. The fragmentation of EU-wide policies and lack of cohesive leadership are seen as major hurdles.

How might a global trade war impact the global supply chain, according to Ian Golden?

A global trade war, particularly one initiated by the US under Donald Trump, could severely disrupt global supply chains. Companies would face increased costs and difficulties in organizing their supply chains, with trade becoming more political. This would particularly affect European, Asian, and lower-income countries dependent on global trade.

What predictions do the experts have for energy prices in 2025?

Energy prices are expected to remain stable or even decrease in 2025. With high supply levels and sluggish growth in key economies like China and Europe, demand for oil and energy is anticipated to be lower. While geopolitical tensions may cause temporary volatility, experts predict energy prices will not experience significant upward pressure.

What new sources of growth are anticipated in Asia for 2025?

Asia is expected to maintain strong growth in 2025, with sectors like biotechnology, medical devices, renewables, energy, and electric vehicles (EVs) being key drivers. The rapid advancements in AI and renewable energy technologies are seen as promising areas of growth, contributing to Asia's economic resilience.

What is meant by the transformation of globalization, as discussed in the script?

The transformation of globalization refers to the shift from traditional global trade practices to a more regionally focused system, particularly in Asia. While digital globalization and investment flows are still growing, the collapse of multilateral cooperation and rising systemic risks could undermine international collaboration on issues like climate change and pandemics.