At the beginning of 2024, when we published our Global Outlook for the year ahead, we warned that 2024 would be “a year of living dangerously” in geopolitics and politics, while the global economy and markets would remain resilient.
In retrospect, both of these predictions came to fruition. Let’s start with the global economy. While not shining as in the immediate post-pandemic years of 2022-23, the global economy did not collapse as some had expected it to, in particular as a result of the sudden, strong and coordinated monetary tightening engineered by the world’s largest central banks. In fact, the US economy has continued to grow at around, or slightly above, its potential. China has decelerated significantly as a result of its housing bust, but the government intervened in the last few months of the year to provide fiscal and monetary support to economic activity. The Eurozone has also grown, albeit at its own characteristic anaemic pace.
Labour markets have continued to surprise to the upside, with unemployment rates close to their all-time lows on both sides of the Atlantic, while wage growth has moderated. Inflation has returned close to central banks’ targets, even if service-sector inflation continues to remain sticky for the time being.
Central banks have pivoted, moving from tightening to pausing to easing over the last 12 months. The Fed started to cut rates in September 2024, carrying out a surprising 50bps cut, which was followed by further 25-bps cuts in October and December. The ECB cut rates in June, September, October, and December. The Bank of England cut rates in August and November. While the Fed has indicated its intention of slowing down the pace of its easing in 2025, the ECB will likely accelerate its own easing, and the BoE will remain committed to its “gradual approach”.
Given all this, markets have performed extremely well, with equities reaching new highs, while bond yields fell. Bitcoin has reached $100K, and gold has also touched its all-time highs, as a result of the increase in counter-party risk.
So, while the economy and market remained resilient, geopolitics and politics were as turbulent as it gets. In geopolitics, the Russia-Ukraine conflict remains open, with little hope of a rapid resolution, in spite of Trump’s re-ascending to the While House. In the Middle East, the conflict in Gaza has widened and become regional, expanding to Lebanon and the West Bank, and now to Syria as well, with the collapse of the Assad regime. The situation around Taiwan remains as tense as ever, especially after the elections on January 2024.
Politically, 2024 saw around half of the world’s population going to the polls to choose their representatives, in a continuum that now goes from liberal democracies (whose number is dwindling) to electoral democracies (such as Turkey) to electoral autocracies (such as Russia). Some unexpected elections took place, such as in France. Clearly, the biggest election of all, for the US President, resulted in a large victory for Trump. We have discussed how this has resulted in a “tech takeover” by Musk and Thiel, and investigated the impact this will have on the future of democracy around the globe.
Now 2025 awaits, and for certain it will be as eventful as 2024 proved to be.
