One political event will very likely do more than any other to shape the global economy in the year ahead. On 20 January 2025, Donald Trump will move back into the White House and then, over the next four years, he will lead the world’s only democratic superpower. Trump’s decisions will affect the lives not just of US citizens, but the lives of people around the world.
Even at a time of flux in world affairs, this represents an extraordinary development, not least because little more than a year ago, Trump’s power seemed to be waning.
On 8 November 2022, Americans went to the polls in midterm elections and, in part because of historical precedents, the incumbent Democrats were expected to perform poorly. Yet the expected ‘red wave’ of Republican gains never materialised. Instead, the Democrats expanded their Senate majority and while they Democrats lost control of the House of Representatives, Republican gains were far less than most had expected.
One part of this story was the way that voters appeared to reject Donald Trump-backed candidates in battleground states. At this point, Trump’s Make America Great Again (MAGA) rhetoric appeared to be losing its appeal and power, especially among younger voters. As for Trump himself, he was beset by legal problems and multiple court cases.
With the US economy outperforming competitors, there were good reasons for Democrats to be optimistic. So what happened? One answer, of course, is that Joe Biden was a poor candidate. His stumbling performance in the June 2024 presidential debate was disastrous and left his successor as Democratic candidate, Vice President Kamala Harris, with a mountain to climb. But look beyond candidates and a more disquieting explanation emerges.
Despite the numbers showing that the US economy was improving, certainly to those in Europe, where growth has been sluggish, many ordinary Americans didn’t think they were seeing an improvement in their own day-to-day situations. As a result, the presidential contest became a change election, one where many voters rejected the status quo.
It was Trump rather than Harris who, in his idiosyncratic and rambling manner, was able to articulate the idea he would shake things up. The failure of Harris to break with the administration with which she served was embodied by the moment when, asked on ABC’s The View in October 2024 what she would have done differently from Biden over the previous four years, she replied, “There is not a thing that comes to mind.”
To return to the present, this all leaves the USA about to move away from the Biden era of ‘deliverism’ – the idea that if you follow through on your policy promises to the electorate, you will be rewarded at the ballot box.
The future will be far more uncertain and potentially radical. And that’s even before we factor in the world’s richest man, Elon Musk, heading up an advisory team, Doge, that has the goal of cutting federal spending by a third. There is every chance that Trump’s populism, his belief in tariffs and his zero-sum thinking will shape the world’s economy for years to come, although perhaps disastrously so.
Indeed, this prospect of a Trump second term is so overwhelming that it’s easy to forget huge changes affecting the rest of the world. To return to the idea of Trump as a change candidate, 2024 was a year in which incumbents of every political stripe performed poorly in elections as a kick-them-out mood gripped electorates globally.
In India, Narendra Modi’s BJP lost its majority. In the UK, the Conservatives fell to their worst-ever electoral defeat. In France, President Emmanuel Macron’s decision to call a snap general election has resulted in ongoing political turmoil.
As in the USA, we can see such reversals stemming, to a large degree, from raw economics. In particular, it’s worth emphasising that even when inflation begins to decline, people who are still paying more for their shopping than they did just a couple of years previously often don’t feel any richer. That’s especially true for those with less disposable income, who can no longer cut any more of their expenditure because such a high percentage of their money now goes on basics such as food and fuel. Volatility in politics, you would guess, will be with us for a while yet.
This is hardly reassuring for those trying to do business internationally. What happens, for example, if France’s current economic woes and its inability to live within its means precipitate a sovereign debt crisis that takes the eurozone back to the rolling crises it endured in the wake of the 2008 financial crash? What happens if Keir Starmer’s brand of ‘deliverism’ fails to connect with the British electorate and Nigel Farage’s Reform Party takes advantage to disrupt Britain’s two-party hegemony? It says much about our times that neither of these notions seems at all outlandish.
Turmoil in the wider world
Looking beyond democratic politics, we could also see reasons to be worried by the ongoing war in Ukraine, widening conflict in the Middle East, the evidence for a worsening climate crisis, China’s growing influence and, arguably, not enough attention being paid to
Moscow and Beijing’s ongoing development of an alternate payment system in the wake of Russia being excluded from the SWIFT banking system because of sanctions. Yet the fall of Bashar al-Assad, which was playing out as we went to press, is a reminder that potentially more positive changes can sometimes occur at a dizzying pace.
Nevertheless, looking ahead to 2025, it’s difficult to find too many immediate reasons for optimism about the near future. Populists, ever happy to reach an accommodation with totalitarian leaders such as Putin, had a good year in 2024 and we live in such interesting times that it would be foolish to bet against the same being true in 2025. Alternatively, if incumbents continue to struggle, we may actually see populists having to live with the consequences.
This is an excerpt from the RetailX Global Elite Top1000 report, it provides a comprehensive analysis of the global ecommerce and multichannel market, offering a 360-degree view of consumer behavior, company performance, and regional economies.
Retail leaders must continue to make strategic decisions despite uncertainty. This report identifies the top five Elite retailers, Amazon, Apple, H&M, Samsung, and Walmart whose success across the Customer, Product, Operations, and Capital Value Chains sets them apart.
Stay informed
Our editor carefully curates two newsletters a week filled with up-to-date news, analysis and research, click here to subscribe to the FREE newsletter sent straight to your inbox and why not follow us on LinkedIn to receive the latest updates on our research and analysis.
