Page 190 - CW E-Magazine (21-1-2025)

Special report Special report

adverse for Ukraine but it may be a are policy hawks who want to subdue This could trigger a worldwide move strategy of being an effi cient manu-
welcome relief for their suffering citizens. China which is menacingly close to the to raise interest rates in the last Quarter facturer of medium technology manu-
This will provide a big escape route for US in technology innovations across of 2025 or at least to delay interest rate factured products for export, and of
Russia which wants a fi g leaf to sign a disciplines ranging from engineering cuts, contrary to predictions of most winding down nuclear energy genera-
peace treaty. It will help Russia recover to AI and Biotechnology (especially economists. tion even at the cost of importing
a bit economically in 2025, potentially in applications), in creating gleaming energy. Germany’s innovation was largely
belying Goldman Sachs projection of a public infrastructure, and buying infl u- Trump is probably barking up the around Industry 4.0, which delivered
drop in GDP growth from 3.2% in 2024 ence in Africa, Latin America and parts wrong tree in Panama (Hutchison Ports effi ciency and automation to increase
to 1.2% in 2025. The Russian economy of Asia. The pessimistic scenario would has been managing two ports on the labour productivity. That position is
may do better in 2025 despite lower oil be a covert and overt fi ght back to block Canal since 1997). He is likely to ex- being seriously challenged by innovative
prices (no more discounting required) Trump’s move through restrictions on tract minor concessions by threatening manufacturers of hi-tech products and
if Trump reduces sanctions to end the export of rare earths and by exporting the Panamanian Government, which is components from China, USA, Taiwan,
Ukraine war. For Trump, it will be a to the US through ‘proxy’ countries in still recovering from droughts, and then South Korea, etc. who can additionally,
political victory, and for Putin, an oppor- which manufacturing plants have been probably by offering to not support adopt Germany’s effi ciency measures.
tunity to cosy up to Trump to get sanc- established. Xi Jinping was tutored in Mexico’s Interoceanic Rail Corridor
tions gradually eased in 2025. Trump Sun Tzu’s war philosophy – ‘Victorious which is a competitor to the Panama Europe’s woes were enhanced by
will want to use the opportunity to push warriors win fi rst and then go to war, Canal. the rising energy costs following the
Russia out of China’s sphere of infl u- while defeated warriors go to war fi rst Ukraine war, with Germany seemingly
ence. After all, Trump needs to support and then seek to win’. Also, expect reduced support for vulnerable in particular; its vaunted
his backers in the US who don’t want to climate change efforts, lower controls that an oil price surge that will hurt oil prices to industrial and individual automobile industry is struggling against
be pushed around by Chinese compa- The tussle between Trump and on oil drilling (modestly increased sup- global economy badly is unlikely in consumers. the Chinese EV onslaught. Trump’s
nies. He will also want Russia to forget China will take interesting turns during ply in the future), lower regulation of 2025, and that a price decline may not threatened tariffs on goods import from
about Iran and Syria. 2025 but don’t assume that China will AI (except to punish OpenAI, if possi- boost global GDP growth. I see it this The Global economy in 2025 the UK and Europe, even in the unlikely
lose. They seem to innovate their way ble), more support to the US auto sector way, in the context of two long term While there is a consensus view event of implementation, will have
China is economic enemy number 1 out of every challenge and constraint (tariffs on Chinese EVs), more defence insights: that the World economy will grow at very little impact on UK and Europe as
China is not in great shape. Despite imposed on them. A modern day Jack production and lobbying internation-  Oil intensity of GDP has been steadily a modest rate of 3.2 to 3.3% in 2025, a whole (exports to USA are only 2.2%
its outstanding progress in the past 40 in the Box! ally at the Government level to secure falling since 1973. Measured in the averages often hide more than they and 3.2% of GDP respectively) except
years, its growth has slowed down in orders from the world over (wars are 2015 Dollars, it took almost 1 barrel reveal; not surprisingly, 22 countries for Germany and Italy. In 2025, energy
the past two years, debt has shot up, America’s big business is Friend No.1 needed around the world to make up for of oil to generate US$1,000 of GDP with a low base will grow at 6% import costs for Europe will fall due to
the population is ageing, real estate Trump got major funding from Elon the end of the Ukraine-Russia war). If in 1973. By 2019, it had steadily (Tanzania) to 27% (South Sudan) with lower oil prices, and it is likely that the
inventory is high and its prices have Musk and other billionaires who want India buys more US military hardware declined to 0.46 barrels. This steady, India, the only large economy in that list Euro which fell since Trump’s victory,
dropped, consumer wealth has shrunk America to deregulate several aspects and nuclear power plants (more on that linear decline could even accele- likely to share the 13th place with fi ve will slowly strengthen to its pre-Trump
and demand for goods has dropped, of governance whilst supporting later), there would be less pressure rate in times to come due to energy other countries with a likely growth of election level by the end of the year.
consumers are downtrading, and conse- domestic manufacturing industries with from Trump to shake up India’s import transition. 6.5%. The richest seven countries, the European economies may grow and
quently monetary policy easing has had incentives, support for cryptocurren- tariff regime. India, which is in the pin-  Academic studies in the past four G7, will grow very slowly except the may also reduce interest rates further.
limited impact in 2024 – all this with- cies, reducing taxes especially for the cer’s grip due to the turn of events in decades, by several oil economists, US whose growth will be just shy of the
out Trump wielding the stick. Trump is topmost layer and the bottommost Bangladesh with support from Pakistan have shown that while a drop in World average – fantastic for the big- Investment fl ows into USA and
likely to announce at least 20% import layer of society. However, there will be and China, will need US support which oil prices boosts Real Global GDP gest economy in the World! impact on EMs
tariff and though China counters with internal Republican moves to prevent will come at a price from the Big Nego- growth, the opposite is not true. Investments are expected to fl ow
more economic stimuli, China’s GDP excessive import tariffs from fuelling tiator. Import duties on some items will Empirically true but sounds illogi- Europe continues to have growth into USA in 2025 as in 2024, because
growth is only likely to hover around consumer inflation (or even likely need to be reduced by India while at the cal at the macro level. At the very challenges; now there is political un- USA will be the only growth engine
4.5% in 2025. In Trump 1.0, Chinese retaliation from Europe and China), and same time, some items exported to the least, they should impact moderately certainty too, in France and Germany. in the Developed World unless Trump
imports into USA grew without reduc- to ensure that tax cuts are moderated in US will attract new import tariffs. Steel both ways because Oil Exporting Therefore, both these economies could shoots a self-goal. NASDAQ tech com-
ing export prices, but the US consumer line with alternative revenue streams may be a problem for India. Nations (nearly 45% of the Nomi- contract a bit in 2025, though Europe panies, lit with AI’s halo, are expected
paid the extra cost of duty. This time to avoid an increase in National Debt nal Global GDP) and Oil Importing as a whole may register a growth of to attract global equity fl ows. This, des-
around, Trump’s tariffs may be higher. which is already unsustainable at 122% Oil prices and economic recovery Nations should face equal and op- about 0.8-1.0% thanks to good showing pite USA’s share of global market cap
China is expected to dump steel, EVs of GDP. Else, it could lead to higher Oil prices are indeed slated to aver- posite effect. It is complicated by by Spain, Czech Republic and Poland. being already at a record high of 70%,
and consumer products in other coun- bond yields and infl ation, leading to age US$74 per barrel for Brent crude in the fact that the governments of two That is after accounting for about 0.4- though the US accounts only for 27% of
tries. The optimistic scenario for China pressure to raise interest rates. Trump 2025, and some speculate that it could of the biggest oil importers, India 0.5% shrinkage due to Trump’s likely the global economy. Several corporate
is that they will buy peace by play- may still err on the side of his backers. even dip to US$50. Oil price predic- and China, have been consistently policies. Germany needs long term bond issues, aggregating US$1.5 trillion
ing to Trump’s outsized ego, but there Rise in infl ation in USA is expected. tions are fi ckle, but it is safe to assume reluctant to pass on the full drop in structural change in their prevailing are also expected in the US, with

190 Chemical Weekly January 21, 2025 Chemical Weekly January 21, 2025 191

Contents Index to Advertisers Index to Products Advertised