Pasaulio ekonomikos apžvalga „Nordic Outlook“ (anglų kalba)

Divided world takes on an uncertain 2025

A world that is out of sync has now entered 2025. By all indications, this year will be eventful. The United States is still showing vigorous economic growth, while most European countries are struggling against headwinds. China reported growth right on target for 2024 but is still grappling with both structural and cyclical problems. India, which now has the world’s largest population, continues its growth journey despite some political changes after last year’s election. In the Middle East, an uncertain ceasefire recently began in Gaza, Syria is carving out a new government after the overthrow of the Assad regime and Iran’s future role feels unusually uncertain. The world’s countries and regions are thus facing the new year under highly divergent, and partly new, conditions.

The big event of early 2025 is, of course, Donald Trump’s return to the White House. As expected, he began his second term with a flying start. First with an inaugural speech in which, aside from repeating many of his election campaign messages, he declared both that the US now wants to expand its territory and that he would like to be remembered as a president of peace. This was followed by the signing of a record number of presidential decrees. He declared emergencies both at the southern US border and in the energy sector. He also withdrew the US from the Paris Agreement and the World Health Organisation (WHO), pardoned those who had been convicted for storming the Capitol on January 6, 2021, abolished diversity, equity and inclusion (DEI) programmes at US government agencies and much more. In the economic field, he was somewhat more cautious. He did announce that tariffs are being considered starting as early as February for China (10 per cent) and for Canada and Mexico (25 per cent), but otherwise his main message was that US trade relations will be investigated and that the issue of broader tariffs will be addressed when the analysis is complete.

Because there had been some fears that he would impose immediate tariff hikes against much of the world, the tactic he chose was relatively restrained. Nor did he launch any immediate tax cuts or unexpected stimulus measures. Overall, the financial market assessment was that risks of inflation, tariffs and rising budget deficits were slightly reduced. As a result, long-term Treasury yields and the US dollar traded lower and the stock market rose in the days following the inauguration. 

But we have only seen the beginning, and the year ahead is likely to be both eventful and uncertain. In spite of everything, we expect the global economy to continue growing by just over 3 per cent and for the US to grow faster than Europe again this year. In Sweden, we expect an economic turnaround during 2025 and believe that after a couple of years of weak performance, we will see a growth surge. However, this will require households to use at least part of future improvements in their finances for consumption, which is probable but not inevitable. We look forward to monitoring and discussing these and many other domestic and international economic issues with you during the year.

This February 2025 issue of Nordic Outlook also includes in-depth themes that address the following topics:
• Demographic trends challenge the economy
• Can the election get Germany moving again?
• Swedish industry amid European weakness

We wish you pleasant reading!