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December 17, 2024
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10 Business Trends for 2025 and Industry Forecasts
Global Overview by the Economist Intelligence Unit
Global indicators are based on data from 60 countries, representing over 95% of global GDP.
Ten Business Trends for 2025
1. Declining inflation is prompting central banks, including the U.S. Federal Reserve, to further lower interest rates, which in turn encourages consumers to make active purchases.
2. Information technology spending is set to reach $3.6 trillion as companies increasingly leverage artificial intelligence. Approximately 30% of large U.S. companies are investing over $10 million in AI, compared to 16% in 2024.
3. The aging population is becoming a growing concern, with about 12% of people over the age of 65. However, only 10% of global GDP is allocated to healthcare.
4. Governments are ramping up large-scale green energy programs. While renewable energy production is on the rise, fossil fuels still account for more than 80% of the world’s energy needs.
5. Electric vehicles are becoming a promising segment for automakers. However, concerns over range are deterring many buyers, which is driving demand for models that don’t require plug-in charging.
6. Airlines are promising to reduce carbon emissions while purchasing new aircraft. International tourist flows are expected to grow to 1.6 billion people, with tourism contributing 5-8% of all greenhouse gas emissions.
7. The real estate market is a source of concern for politicians and regulators, even though mortgage repayments totaling $2.1 trillion are nearing completion. Housing prices remain high overall, though a decline is observed in China.
8. Environmental policies are contributing to a 7.5% increase in global metal prices, as demand for various resources—from car batteries to cables—rises, thereby driving the need for copper and steel.
9. Environmental goals are leading to an increase in capital expenditures on infrastructure worldwide. Total real estate investments will reach nearly $28 trillion, accounting for a quarter of global GDP.
10. Transport companies must also adapt to "green" trends, as 40% of their emissions fall under the EU’s emissions trading system. Geopolitical factors are also causing unpredictable changes.
Even if 2025 does not bring major new conflicts, geopolitical tensions will still impact the global economy. Global GDP is expected to grow by only 2.5%. European economies will strengthen, but emerging markets will remain unchanged due to trade barriers, climate change, and technological challenges. Inflation and interest rates will decrease, but high public debt and defense budgets will limit governments' spending capacity.
Automotive Industry
After nearly complete stagnation in 2024, global new car sales are expected to grow by 2% in 2025. New truck sales will increase more rapidly—by 4%, driven by infrastructure development in emerging markets. Electric vehicles (EVs) will become the primary driver of the automotive market, growing by almost a quarter, although demand will remain below recent highs. Concerns about range and high prices will prompt buyers to switch to non-plug-in models. Efforts to reduce vehicle emissions, though sporadic, will remain important. Norway aims to make all new cars zero-emission by 2025, becoming the first country to achieve this goal, though trucks will not be included in this standard. Australia, lagging behind on emissions, will finally introduce fuel efficiency standards. However, the EU will delay the implementation of its Euro 7 standards until 2028. Despite this, gasoline and diesel vehicles will face increasing restrictions. More cities will introduce zero-emission zones, with Stockholm becoming the first to ban fossil fuel cars in its city center.
Defense
The wars in Ukraine, Lebanon, and Gaza will increase demand for weapons, but defense spending will be unevenly distributed. The US, the largest spender, will increase its military budget by 4%, to $884 billion, while China, the second-largest spender, will raise its expenditures even faster. NATO will discuss a national defense spending target of 2.5% of GDP, although one in three members will fail to meet the current 2% target. The alliance will develop a strategy to counter Russia and allocate $43 billion to Ukraine for continued combat. However, Germany plans to halve its spending on Ukraine to save funds. The EU, concerned about weakening US commitments to NATO, will launch rapid deployment forces and increase ammunition production. Meanwhile, many of Russia’s Soviet-era military systems will become obsolete by mid-2025. The US will continue to support Israel, despite some domestic doubts. China’s navy will continue confrontations in Asian waters, backed by new diesel-electric submarines. The Philippines will increase defense spending in response, while Australia will boost troop numbers and offer foreign citizens citizenship in exchange for military service. Japan will deploy new drones, and the US will deploy hypersonic missiles capable of reaching speeds of up to 3,800 mph (6,115 km/h).
Energy
Energy consumption will rise by 2% to a record 14.5 trillion tons of oil equivalent in 2025. Fossil fuels will account for over 80% of this, increasing carbon emissions by 1.7 times compared to 1990 levels. Coal use will decline in Europe and North America, but India and Russia will continue to rely on it. Coal consumption in China will approach its peak. Green energy will thrive. Renewable energy sources (including hydro) will account for 14% of global supply. Wind and solar will generate one-sixth of global electricity. A massive solar farm will be built in Gujarat to supply 4% of India’s energy. Zambia will build dozens of solar mini-grids to serve remote villages. Texas will launch its first geothermal power plant connected to the grid. China, India, South Korea, and Turkey will activate their nuclear reactors (zero-carbon emissions), increasing the global total to 447.
Financial Services
In 2025, banks will lobby regulators as Basel III’s final rules, developed after the 2007-09 financial crisis, come into force. US banks, fearing interest rate cuts, will face pressure to increase capital buffers. This could lead to protests from European competitors, but banks in Asia, supported by rapid growth, will be more optimistic. Regulators will worry about commercial real estate loans due to the shift to hybrid working, as global banking loans grow by 7% to $112 trillion. Climate change will undermine insurers' forecasts. However, Swiss Re, a major insurer, predicts rapid industry growth, with life insurance premiums reaching $3.1 trillion and non-risk insurance premiums rising to $4.8 trillion. Environmental reporting rules will tighten in many countries, with EU companies publishing their first sustainability reports. However, opposition to "sustainable" investments is spreading in the US.
Food and Agriculture
Most food products will become cheaper in 2025 due to increased supply. The EIU food, feed, and beverages index will decrease by 25% from the peak of 2022. Beverages and sugar will lead the decrease, while prices for oilseeds and grains will remain more stable. After El Niño ends, La Niña will damage crops in the Americas and benefit them in Asia. Wheat production will recover, despite difficulties in Ukraine, a key producer. India will ease rice export restrictions as global prices fall. Even cocoa prices, which have surged over the past two years, will drop by a quarter, to the delight of chocolate lovers. Consumers will spend $11.5 trillion on food worldwide, 6% more than in 2024. They will eat more fish and meat, despite increased sales of vegan products. However, even with rising food sales, profits for food companies will fall from recent records. Unilever will cut 7,500 jobs, and Danone will focus its strategy on health food products.
Healthcare
Healthcare systems will be under pressure in 2025 due to aging populations and staffing shortages. Nearly 12% of the global population will be over 65. However, healthcare spending will only account for 10% of global GDP, less than during the COVID-19 pandemic when it reached 11%. Global spending will reach $11 trillion, with almost half of it coming from the US. Mandatory healthcare spending will grow faster than voluntary spending, as countries expand public health insurance. The UAE will require immigrants to have insurance, while China will work on improving its public hospitals and clinics. However, the global health goal set by the World Health Organization will remain elusive.
Media
Global advertising spending growth will slow to 4%, as 2025 will lack major events like the Olympic Games or US elections. Digital advertising sales, which account for over 60% of the total, will grow at the slowest rate since 2020. However, advertisers will turn to new digital tools. Artificial intelligence will become popular for creating ads and targeting, though disputes over intellectual property and other issues between media giants and AI companies will continue. Social media, crucial for advertisers, will face increasing regulatory scrutiny. US lawmakers will continue their battle with China’s TikTok, while Malaysia will require major tech platforms to obtain licenses, raising concerns among free speech advocates.
Cable TV will continue to lose popularity. By 2025, 72% of US households will either have canceled their cable service or never had it. This trend will accelerate with the introduction of free ad-supported tiers on streaming platforms like Amazon Prime and Hulu. The loss of broadcasting rights for sports events, including NBA games moving to Amazon, will significantly speed up this process.
Streaming services will also negatively impact box office revenues. In 2025, box office earnings will not return to pre-pandemic levels, with projections estimating $41 billion in revenue. However, major films like Avatar 3 and the eighth installment of the Mission Impossible series, delayed due to Hollywood strikes, will help theaters.
Overall, 2025 will mark another stage in the transformation of the media and entertainment industries, driven by technological innovations, shifting consumer habits, and new regulations.
Translation and adaptation of material The Economist
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