Following a tumultuous year that has seen fears of a global recession gradually fade, the election of a new British governing party and US President-Elect, a weather-blighted Paris Olympics, and conflicts continuing across multiple parts of the world, all eyes are looking forward to how this whirlwind year has impacted the international economy moving ahead.
Chase Buchanan Wealth Management, an accomplished financial advisory firm with bases across Europe and North America, has commented on the current forecasts and offered insights into what recent political events might mean as we approach the end of the year.
Published Forecasts for the 2025 Economic Period
Economists typically refer to credible sources such as the International Monetary Fund and the World Bank Group to ascertain the global economy's health. This is impacted by multiple variables, including trade levels across borders, energy and raw material prices, conflicts and political tensions, and investment appetite in the major markets.
The latest projections indicate that, although the economy is expected to remain stable, growth is likely to be slow or underwhelming. The IMF’s most recent report, published in October, states that:
- Global outputs in terms of GDP look to remain stagnant at +3.2% in 2025, the same level as in 2024. This predicted plateau is consistent across the developed economies.
- Disinflation is expected to continue, albeit with risks of volatility within the financial markets, with some analysts expecting that central banks might shy away from reducing baseline interest rates.
- Emerging markets look likely to outperform the global averages with an estimated GDP growth of +4.2% while noting that this also reflects a static level of output compared to 2024.
Longer term projections hint towards upgraded forecasts earlier in the year for the US, counteracted with downgraded forecasts for the larger EU economies.
The overall growth forecast for the global economy is that it will reach +3.1% within the next five years, which remains slow compared to pre-pandemic levels.
The Impacts of Political Change on Expectations for Economic Performance
In the space of just five months, the UK's General Election and America's Presidential Election have both resulted in handovers of power—although this will not take place until January 2025 in the US. Donald Trump's election and the assumption of his second presidency will undoubtedly impact earlier projections.
Although the quantifiable impacts are yet to be seen, there is much speculation that America will impose higher tariffs on a broad range of imported goods. These relate to proposals to lower federal income taxes and replace them with increased tariffs of 10% to 20% on international suppliers.
Generally, the US dollar is expected to become stronger, but with a greater likelihood the Federal Reserve will keep interest rates high to stabilise growth rates. Other economists think that proposals to lower taxes on big corporations could boost returns across the stock market, especially in technology, banking and fossil fuels.
These contrast with warnings that some tax-cut plans may not make it through Congress, and that government borrowing to finance defence spending could mean significant deficits and a spike in borrowing costs in the US.
Expert Insights Into Preparing for a Shifting Global Economy in 2025
Lee Eldridge, Group CEO and Head of Investment Advisory at Chase Buchanan says, ‘When reviewing all of the data, statistics and metrics, it seems clear that most projections are tentative at best, and that there is the scope for major change in the coming months, not least in early 2025 when the anticipated step-backs in US regulations, particularly around sustainable investment and energy production take effect.
Risk analysis is always an inherent aspect of investment management. Still, our advice would be to avoid making hasty decisions at this stage, particularly when dealing with significant proportions of your wealth or assets.
Although there is uncertainty about how the global economy will react, next year may be one of substantial opportunity. For example, there is talk of better trade collaborations between Europe and China in response to increases in US tariffs and as the Chinese government looks for solutions to tackle industrial overcapacity.
At the same time, the focus in Europe and the UK on sustainable energy following the Russian invasion of Ukraine and the impacts on energy prices could prompt the lifting of strict tariffs on imported technology, including electric vehicles and solar panels.
The key takeaway is that a balanced approach is necessary and that professional, relevant advice is essential to making controlled and timely judgements about the best ways to manage assets, investments and wealth portfolios as the picture becomes clearer.’
Those interested in more tailored advice or help managing their wealth now or into the new year are advised to contact Chase Buchanan Wealth Management directly to discuss their current financial position and plans or strategies for 2025.
Read more about Chase Buchanan - Chase Buchanan Wealth Management Celebrates Ongoing Growth Throughout 2024
About Chase Buchanan Private Wealth Management
Chase Buchanan is a highly regulated wealth management company that specialises in providing global finance solutions for those with a global lifestyle. We are global financial advisers, supporting expatriates around the world from our regulated European headquarters, and local offices across Belgium, Canada, Canary Islands, Cyprus, France, Malta, Portugal, Spain, UK and the USA.
Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15.
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