Elizabeth Morgan | Outlook for 2025 – one of great uncertainty

THE ECONOMIC outlook for 2025 cannot be assessed without taking account of the possible political and economic impact of the incoming administration of Donald Trump in the USA. His inauguration will be on Monday, January 20.

Members of the Jamaican private sector have dismissed US President-elect Donald Trump’s tariff threats as just election rhetoric. In their view, Trump doesn’t actually mean it. He will not make good his threats.

Well, the president-elect last week added to his rhetoric. Informing the USA and the world that he intends to take possession of Canada, Greenland, and the Panama Canal Zone, and, to add a little sweetener, he will unilaterally rename the Gulf of Mexico, as the Gulf of America. It appears that the world could be reverting to the 19th century and the age of robber barons. That, eventually, did not end well.

In assessing the outlook for 2025, many economic analysts are taking the utterances of President-elect Donald Trump quite seriously.

THE 2025 GROWTH PROJECTIONS

The UN has said that amid this global uncertainty, the global growth projection for 2025 remains at 2.8 per cent.

In Europe, growth in the European Union (EU) is projected at about 1.5 per cent. The rest of Europe seems to average about one per cent. The United Kingdom (UK) could have a growth of 1.7 per cent. Europe is not exhibiting robust performance.

The Russia/Ukraine war will enter its third year in February and has certainly created economic problems for Europe and the world. Europe seems to be in further difficulties with the rise of far right political parties in several countries, including Hungary, Austria, Italy, Sweden, Finland, France, and Germany. The UK has seen the rise of the far-right Reform Party. These parties are gaining popular support with growing concerns about excessive immigration and economic stagnation.

In North America, the people of the USA surprisingly re-elected Republican Donald Trump citing concerns about inflation and immigration. In the face of global crises, the US economy is reported to be currently doing quite well and is expected to grow by about 2.5 per cent in 2025. Canada, which will have federal elections this year, has been facing economic difficulties with the same concerns about inflation and immigration. The Conservative Party is leading in the polls and Prime Minister Justin Trudeau has announced his resignation as leader of the Liberal Party. The Canadian economy is expected to grow at 1.5 per cent in 2025. Mexico, with a new president, is looking at a slowing growth rate, about one per cent in 2025.

For Latin America and the Caribbean, on average the growth in 2025 is projected to be about 2.5 per cent. Latin America and the Caribbean, as a region, has been facing economic headwinds having average low growth rates. Immigration is a problem due to migrants mainly from Venezuela and Haiti. Both countries are facing political upheavals. Fastest growing countries in Latin America and the Caribbean include the Dominican Republic and Guyana.

In Africa, the projected growth rate for 2025 is 3.7 per cent. South Africa’s economy has been ailing with issues surrounding production and job creation. This economy is projected to grow by about two per cent. Nigeria’s growth should also be about two per cent. Eleven of the world’s fastest growing economies were in Africa in 2024. Africa, however, continues to have wars, e.g., in Sudan, and political and social instability, and thus, is not realising its potential.

Growth in Asia, minus Japan, is estimated to be about 3.9 per cent. China’s economic growth is slowing, which could be short-term. Their projection for 2025 is 3.5 per cent. The economy of India continues growing and their 2025 projection is about 6.6 per cent.

The other developed countries, such as Japan, Australia and New Zealand, like other developed countries, are seeing slower growth – the projections are Australia – 2.3 per cent, New Zealand – 1.9 per cent, and Japan – 1.9 per cent.

Growth in the Middle East for 2025 is projected to be about 3.5 per cent not just from oil, but from tourism and in other non-oil sectors, as they diversify. Saudi Arabia should have growth of 3.7 per cent. However, war continues in the Middle East in Syria, Lebanon, and Palestine. The Middle East, including Iran, Iraq, Yemen, always has the potential for escalation in violence causing increases in oil prices.

In these times, countries of the Global South need to get their houses in order.

A TROUBLING TIME

The problem with 2025 projections is that the after effects of January 20 are unknown, a mystery. As threatened, will increased tariffs be imposed immediately on all imports into the USA, with 60 per cent on China, and 25 per cent on Canada and Mexico? Will there be mass deportation of undocumented migrants from the USA? Will the USA be acting to annex Canada, Greenland and the Panama Canal Zone?

Will the USA immediately end the wars in Europe and the Middle East?

At the multilateral level, we are again seeing the impact of climate change with the raging fires in Los Angeles, USA. There are, however, many in the Trump incoming administration who do not believe in climate change and, again, the US may withdraw from the UN Convention on Climate Change. They already plan to withdraw from the World Health Organization. So, the US participation in the UN system is in question. With the intent to increase protectionism, the US involvement in the World Trade Organization is also in doubt.

All of this has implications for the global economy and for growth projections for 2025.

GLOBAL MEETINGS

The annual World Economic Forum will be held in Davos, Switzerland, on January 20-24, and will be one of the first global events in the second Trump era. It will begin to give a real-time analysis of what the future really holds.

On other meetings, for this year, Canada will assume the presidency of the G7, now held by Italy; and South Africa will hold the G20 presidency, now held by Brazil. The Summit of the Americas is to be held in the Dominican Republic. That should be interesting. Will President Trump attend?

The COP30 Climate Change conference will also be held in Brazil. Countries will know by then the US’s approach to these UN conferences and treaties.

For CARICOM, the incoming chair is Prime Minister Mia Mottley of Barbados, who will host the 48th Regular Meeting of the Conference of Heads in February. There should be some indication from this of CARICOM’s approach to a new Trump era.

A quite intriguing year could be ahead; tighten your grip.

Elizabeth Morgan is a specialist in international trade policy and international politics. Send feedback to columns@gleanerjm.com