Facing the new year, the UK's Financial Times published its annual forecast for a series of events in 2025 yesterday (31st), focusing on the economic policies of US President-elect Trump, the possibility of a resolution to the Russia-Ukraine war, the Federal Reserve's interest rate decision this year, artificial intelligence (AI), Bitcoin, and more. BlockTempo now translates the original text as follows.
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1. Will Trump launch an all-out tariff war?
Overall, it is highly likely. We can say that by the end of the year, at least half of US imports will be subject to tariffs of at least 10%. No one can really read Trump, but he will certainly target imports from China, which account for about 15% of total US imports.
2. Will Ukraine and Russia reach a ceasefire?
Yes. However, the US must impose even tougher sanctions and increase support for Kyiv to persuade Moscow to seriously participate in peace talks.
To secure a safe environment under US support, Ukrainian President Zelenskyy will agree to Russia's de facto, rather than legal, control of the territories it currently occupies, and attempt some territorial swaps, but Ukraine's accession to NATO will ultimately be shelved.
3. Will US interest rates be lower at the end of the year than they are now?
No. Trump's tax and tariff policies, as well as his tough stance on illegal immigration, will increase the stickiness of US inflation. Therefore, the Federal Reserve must remain cautious. Meanwhile, the ECB and the Bank of England will continue their rate-cutting path, leading to further divergence between the US and Europe.
4. Will Macron continue to serve as President of France?
Yes. However, the very fact that this question is being raised shows that Macron is in a vulnerable position. With about 30 months left in his second term, Macron is paying the price for his decision to call a snap election this summer, which ultimately ended in defeat for his camp.
5. Will the US tech giants decline?
No, but they won't go any higher either. Amazon, Apple, Microsoft, Meta, NVIDIA, Tesla, and Alphabet reflect the vitality of the US private sector, investor focus on AI, and the US's leadership in technology - these phenomena and factors will continue to exist in 2025, and the incoming Trump administration, essentially a takeover of the stagnant political world by a tech-driven, vibrant private sector.
However, three major issues will limit their further expansion: 1) Soaring capital expenditures may hurt profitability; 2) The AI bubble is growing; 3) Astronomical valuations have prompted investors to seek out smaller tech companies as alternatives.
6. Will China's export prices continue to fall?
Yes. The competitiveness of Chinese companies, especially in high-tech manufacturing, means that China's export prices (in RMB terms) are likely to continue to plummet overall.
In October 2024, China's export price index fell 5.2% year-on-year, and in some months of 2025, the index may plunge another 10%.
7. Will Musk clash with Trump?
No. Before Trump took office, Musk's companies had already benefited from the expected relaxation of regulations, and Musk's personal net worth had soared by about two-thirds.
8. Will Germany relax its debt limits?
Yes. As Germany faces huge spending needs, especially in defense, coupled with economic stagnation, calls for relaxing debt limits are growing.
Debt limits have become one of the core issues in the upcoming February election, which is a key reason for the collapse of the Olaf Scholz government.
9. Will the bond market collapse?
No. In an era of high debt levels, investors will be highly cautious about any signs of Trump loosening borrowing policies and pushing for tax cuts. The loss of confidence in US Treasuries would have a disastrous impact on the US economic markets, including the stock market, so Trump is unlikely to test investors' sensitive nerves here.
10. Will China's carbon emissions decrease?
Due to its vast solar resources and increased electric vehicle usage, as well as a depressed real estate market, China's carbon emissions in 2024 may be flat or slightly higher than 2023. However, Xi Jinping's economic stimulus measures in 2025 may offset the contributions of solar, electric vehicles, and other decarbonization efforts.
11. Will the Labour government in the UK keep its promise not to raise taxes further?
For now, yes. However, the performance of the opposition MPs is telling us that this is not a stable promise. UK Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer used various forms of wording in their October proposals to provide a little breathing room after their £40 billion tax hike policy was unveiled.
12. Will Israel and the US attack Iran's nuclear facilities?
No. After a year of geopolitical tensions, Israel has become more daring, while Iran has become relatively vulnerable. But Israel may need US support to destroy Iran's nuclear infrastructure, and Trump may remain cautious on this.
13. Will Bitcoin break $200,000?
Yes. Bitcoin broke $100,000 in just December, and while doubling from there seems exaggerated, why not? The Trump team is fully embracing cryptocurrencies, which has already driven a post-election crypto rally.
In a more friendly regulatory environment, the SEC is expected to end its aggressive litigation against crypto companies and establish clear rules, allowing Wall Street and asset managers to hold and trade cryptocurrencies more easily and safely.
Institutional inflows and no worries about regulatory enforcement will only drive Bitcoin's price higher.
14. Will India's GDP surpass Japan's?
No, India's growth will slow down.
15. Will electric vehicles account for more than a quarter of the global car market?
No, the interest of consumers outside China in electric vehicles has already weakened, and 2025 will also be a difficult period for electric vehicles. However, in order to meet the increasingly strict emission rules in Europe and the UK's electric vehicle sales targets, automakers will still launch more types of electric vehicles and try to reduce the selling price.
As the price of electric vehicles is on par with traditional vehicles, China will still drive market growth. However, the biggest uncertainty is in the United States, as the incoming Trump administration is likely to slow down the transition to electric vehicles.
16. Will Argentine President Javier Milei cancel foreign exchange controls?
Yes. Due to concerns about triggering hyperinflation and insufficient reserves, this libertarian president has so far refused to lift the restrictions on how much foreign currency individuals and businesses in Argentina can purchase.
However, by 2025, he may take the risk and try it.
17. Will the Sudanese war continue?
Sadly, the answer is yes. The Sudanese war has become a proxy war, attracting various forces from the UAE to Russia. The complex intertwining of domestic and foreign interests makes peace difficult to achieve.
This war has displaced 12 million people and caused famine for millions more. Ending this conflict will require a massive international effort, but unfortunately, Sudan is too low on the world's priority list for this to happen.
18. Will we have usable AI agents?
Yes. AI Agents are expected to be one of the most closely watched focuses in 2025, with major tech companies and AI startups actively promoting this concept. In 2025, we will see companies like Google, OpenAI, Anthropic, and Microsoft launch related products, and the most successful AI agents will become the main channel for our connection to the digital world.
19. Will there be another major Hollywood studio deal?
Yes. In 2024, Paramount became the first Hollywood studio forced to compromise due to the new streaming economy. Next will be Warner Bros., which, like Paramount, is struggling with its declining cable TV business.
20. Will CDs experience a long-term revival like vinyl records?
No. CDs, as a marketing tool, are not the same as vinyl records, as CDs are often purchased for their packaging.
