Economic and political prognosis for 2025: Trends and challenges

Economic uncertainties, geopolitical conflicts, and domestic challenges dominate global and Indian scenarios in 2025

- AJIT RANADE

We always begin the calendar year with a degree of optimism. To live with hope is in the very nature of human existence. No matter how tough the challenges in the year ahead, the optimists outnumber the pessimists. No amount of gloom or doom prospects purveyed by dismal economists can deter the optimists. Their confidence in the future is undiminished. In that spirit, here is a prognosis for the year 2025, full of tough challenges for the optimists to tackle and overcome.

The year ahead is full of uncertainty. Making an accurate prediction is foolish and sure to fail. The sources of global uncertainty are economic and geopolitical. In the latter category are many factors. These include the outcome of the endless war in Ukraine, the escalation of the Israel-Hamas conflict and its spillover into the wider region of West Asia, and the ascendance of far-right parties in many countries, most prominently in Germany. One of the largest economies in the world, the German government lost the vote of confidence in Parliament this month, leading to mid-term elections early next year. The German economy will contract for a second year in a row, even as it grapples with a rising deficit, the need for greater funding of overseas wars, a shortage of skills, and under-funded education. Then there is rising anti-immigrant sentiment fueled by far-right parties. Will Germany tilt closer to Russia or to NATO? How will it deal with Iran and its competitor China? Will its economy bounce back?