Geopolitical uncertainty is significantly shaping the economic landscape in 2025, as highlighted in the latest Global Outlook report from the Economist Intelligence Unit (EIU).

A central factor contributing to this uncertainty is the shift in US policy, particularly the increased focus on tariffs targeting China, which has resulted in the highest import duties in decades.

These tariffs have disrupted global trade flows and raised the risk of retaliatory measures, further destabilizing markets worldwide.

Major economies, including China, Japan, and the European Union, are also feeling the negative impacts of these new trade realities, leading to a notable slowdown in global productivity.

As a result, business confidence is decreasing, and supply chains are becoming increasingly vulnerable to both shocks and ongoing political pressures.

In response to this challenging economic environment and uncertain inflation trends, the Federal Reserve is expected to implement deeper interest rate cuts, raising concerns about potential stagflation.

The EIU forecasts a contraction of 0.1% for the US economy in 2025, indicating a potential recession this year.

Despite these risks, the 2025 outlook emphasizes the potential for growth opportunities amidst rising market volatility.