Global economic growth is projected at 3% for 2025. Trade tensions and policy shifts are creating uncertainty. Businesses and consumers feel the impact.
Trade Tensions Rise
Proposed tariffs are shaking up global markets. U.S. policies, including 10-20% import tariffs, could disrupt supply chains. Higher costs for businesses and consumers are likely. Retaliation from trade partners might shave 0.5% off global GDP growth. This affects commodity demand, with oil potentially losing half a year’s growth. Companies must adapt quickly to stay competitive.
Inflation Pressures Persist
Inflation remains a concern despite cooling trends. Public worry about rising costs is high. Household budgets are strained, especially for essentials like food and energy. Consumer debt in the U.S. hit $17.3 trillion, with credit card and auto loan delinquencies rising. Central banks face tough choices. Lower interest rates could boost spending but risk fueling inflation further.
Consumer Confidence Wavers
Consumer confidence is up slightly, reaching 114.8 in early 2024. Yet, challenges loom. Gen Z struggles with high debt-to-income ratios, making homeownership tough. Over 40% lack savings for down payments. Baby boomers face retirement with insufficient funds—many have no savings at all. These pressures could curb spending, slowing economic growth. Businesses need to focus on affordability to retain customers.
Business Strategies Shift
Companies are rethinking operations. Geoeconomic fragmentation pushes 34% of businesses toward new models. Some are offshoring, while others re-shore to reduce risks. Flexibility is key. Firms that adapt to policy changes and consumer needs will thrive. Innovation in cost-cutting and sustainable practices can also drive growth.