Global Thematic Outlook 2025

By the end of 2024, we have shared our views on 2025 Global Economic Outlook, highlighting the key macroeconomic forces that will shape the year. However, understanding the Global Themes is equally critical as well. These themes encompass the geopolitical, technological, and structural shifts that defines the global narrative in 2025. Better recognize the global changes, we can better anticipate challenges and seize opportunities in a rapidly evolving market.

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1. Peace and Truce: A Fragile Promise?

One of the most anticipated developments in 2025 will be the pursuit of peace, particularly with Donald Trump’s expected return as US president. Trump has built much of his campaign around brokering peace agreements, aiming to solidify America’s position as the world’s dominant superpower aka American First. This strategy aligns with his "Make America Great Again" narrative, emphasizing U.S. influence on the global stage.

While initial peace efforts may succeed, history tells us that such truces are often short-lived. The durability of these agreements remains uncertain, as geopolitical tensions elsewhere will likely offset any initial stability. As one region calms, another may face unrest, ranging from localized skirmishes to larger-scale conflicts. The balance between peace and conflict in 2025 will be delicate, and its impact on markets and geopolitics will be profound.

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2. The Shift from Globalization to "Crossworld" Alliances

Globalization, once synonymous with free trade and seamless economic integration, has undergone a dramatic transformation. In recent years, the world has shifted from being "flat" to increasingly segmented, with nations prioritizing domestic interests over global collaboration. However, a new paradigm is emerging, what we call Crossworld Alliances. These alliances blend regional partnerships with selective global collaborations, striking a balance between sovereignty and shared benefits.

The roots of this transformation lie in historical trends such as the creation of regional blocs like the EU and NAFTA. More recently, disruptions like COVID-19 exposed vulnerabilities in global supply chains, prompting countries to reexamine their dependencies. In 2025, this hybrid model of economic engagement will dominate. Nations will seek partnerships that protect critical industries particularly in AI sector which rapidly growing, US Tech players have dominated the markets from infrastructure, supply chain to real-life application, leveraging global synergies, redefining trade have also become a priority for many countries.

3. Geopolitics: The Expanding Influence

Geopolitical dynamics will take primary concern in 2025 as major powers jostle for influence in an increasingly fragmented world. Instability in key nations like Germany, France, South Korea, and Canada, has created opportunities for superpowers to assert their dominance. Strategic regions such as the UAE, Africa, and even the Arctic are becoming new battlegrounds for influence, driven by resource competition and ideological positioning.

The Arctic, for instance, has emerged as a critical area of interest due to melting ice caps, which are opening new shipping routes and exposing untapped energy reserves, say like natural gas and oil are actually shipped by cargo ship. In Africa, nations like China, the U.S., and Russia are vying for strategic partnerships to secure access to critical resources. Geopolitical manoeuvring in 2025 will extend beyond traditional economic considerations, shaping the ideological and strategic contours of the global order.

4. The AI Arms Race

Artificial Intelligence continues to dominate as the most transformative technological force of our time. In 2025, the competition in the AI sector will continue to intensify, supported by both corporate innovation and country-backed initiatives. Governments worldwide are recognizing the strategic importance of AI and are ramping up support through policies like the CHIPS Act in the US and similar programs in Europe and Asia.

AI’s influence extends far beyond the tech sector, it is reshaping industries such as healthcare, finance, and logistics, while becoming a key component of defence strategies for the nation security. The global AI race isn’t just about technological breakthroughs; it’s also about securing geopolitical leverage. Nations that lead in AI will not only drive economic growth but also gain a significant strategic advantage in an increasingly digitized world.

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5. Energy: The Battle for Sustainability

The demand for sustainable energy solutions will define the global energy landscape in 2025. As energy consumption continues to rise, driven by data centers, electric vehicles, and industrial needs, the focus is shifting toward cleaner, more efficient solutions. Small modular nuclear reactors (SMRs) are gaining traction as a scalable and reliable source of power for high-energy industries.

At the same time, nuclear fusion technology, long considered a distant dream, is moving closer to reality. Pioneer Microsoft has signed a 20-year nuclear power contract with clean power giant Constellation. We can manifest that significant investments are being made to harness this revolutionary energy source, which could transform the global energy landscape. Alongside these developments, renewable energy sources like wind, solar, and hydrogen will continue to play critical roles. The overarching theme for energy in 2025 is sustainability, balancing the need for growth with environmental responsibility.

6. Central Banks: The "Whac-A-Mole" of Rate Cuts

Global monetary policy in 2025 will resemble a game of "whac-a-mole," as central banks navigate disparate economic recoveries. While inflation appears somewhat contained in some countries, does that really mean the central bank have to adjust higher the rate to stabilize the inflation? It appears that a high-interest rate environment has become the new norm, though the path to sustained stability remains uneven. Central banks will adopt varied approaches based on their unique challenges.

US: Economy remains strong, yet upcoming Trump’s presidency brings lot of uncertainties to the economy. Not in rush for the cut?

Europe: The ECB is expected to remain reactive, adjusting rates to address immediate economic pressures.

Switzerland: SNB may take pre-emptive measures to maintain stability, continuing to be a funding currency.

Japan: The BOJ’s slow response to shifting conditions could lead to longer-term challenges, potentially destabilizing its economy particularly we can see inflation is accelerating.

This uneven monetary policy landscape underscores the complexities of a post-pandemic world. Central banks will play a critical role in shaping economic trajectories, influencing everything from currencies to equities and fixed-income markets.

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Looking Ahead: Navigating 2025

As we step into 2025, these global themes will converge and profoundly shape the world’s political, technological, and economic trajectory. Peace negotiations, evolving regional alliances, breakthroughs in AI, and the pursuit of sustainable energy solutions are set to dominate global discourse. In the meantime, central banks face the formidable challenge of navigating uneven recoveries to maintain economic stability. 2025 marks a pivotal year of transformation, where challenges and opportunities coexist, offering both risks to navigate and prospects to seize as the world continues to evolve.

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