Brace for a grab-bag of global trends as 2025 kicks off

From the big political shift in America to the crisis in West Asia, there'll be much to watch this year

- NARAYAN RAMACHANDRAN

And just like that, we are a quarter-century into the new millennium. These 25 years have brought massive change in a variety of spheres, particularly in geopolitics. We have come from a world with a single superpower in America to a live contest between the US and China over territory, influence and technology. Set against this background, here are some trends to watch in 2025, categorized by the probabilities that I have assigned them.

High probability (above 70%): President-elect Donald Trump has appointed businessmen Elon Musk and Vivek Ramaswamy to the extra-governmental Department of Government Efficiency (DOGE). Yet, the "partnership" between Trump and Musk is likely to be strained to breaking point this year. The circumstances surrounding that break-up will make for great drama.

China is in deep economic trouble and its incrementalism is not helping. Its 10-year government bond yield is now at a historic low of 1.6%. China is now also in deflationary territory. For President Xi Jinping to go back to his modus operandi of consolidating power, he will need the economy to be a neutral factor. Look for a massive stimulus programme to revive the Chinese economy.

For the prior two years combined, the S&P 500 outperformed Vanguard's All-World ex-US index ETF by 56% to 23%. A meaningful Chinese stimulus combined with a market tendency to revert to the mean would reverse this trend, putting a dent in American economic exceptionalism.