Catenaa, Wednesday, December 25, 2024- As the global economy begins to recover from the COVID-19 pandemic, a slew of challenges looms for 2025, threatening economic stability worldwide.
In 2024, central banks eased interest rates after taming inflation, spurring record stock market highs in the US and Europe.
Yet, despite these gains, voters across major democracies ousted incumbents amid a worsening cost-of-living crisis.
Heading into 2025, risks include potential U.S. trade tariffs under a Donald Trump presidency, which could ignite inflation or trigger a global slowdown. Unemployment, near historic lows, could rise. Compounding concerns are geopolitical conflicts in Ukraine and the Middle East, economic uncertainty in China, and political gridlock in Europe’s largest economies, Germany and France.
Developing nations face acute vulnerabilities. The World Bank reports that these countries, already in their worst economic state in two decades, risk further setbacks from weaker trade and funding conditions. Meanwhile, richer economies confront budget pressures, balancing climate change costs, military expansion, and aging populations with declining public trust in governments.
European Central Bank President Christine Lagarde predicts “uncertainty in abundance” for 2025, with global markets eyeing decisions from China’s economic transition to U.S. tariff policies. A stronger dollar, driven by inflation, could tighten financial conditions in emerging markets.
Amid these complexities, the International Monetary Fund warns, “Brace for uncertain times.”
