Outlook 2025: Ronald Verhagen (AF Advisors)
By Ronald Verhagen, Director, AF Advisors
‘Following recent updates, the IMF and World Bank now both expect global growth of around 3% for 2025, a slight downward revision from previous estimates. A gradual decline in inflation and more stable interest rates are creating room for moderate growth in investment and trade. Nevertheless, geopolitical tensions, protectionist tendencies and the ongoing disruptive effect of US politics remain key risk factors. The baseline scenarios assume that trade barriers will remain in place. If these are eased, there will be economic tailwinds relative to the baseline scenarios. Markets now appear to be anticipating easing, but this is wishful thinking rather than reality for the time being.
This creates a landscape of increased volatility for investors, and diversification across regions, sectors and asset classes is not a luxury but a necessity. It forms the first line of defence against idiosyncratic shocks. Bonds with longer durations will benefit if central banks continue to cut interest rates. On the downside, there are short-lived but violent market reactions to trade rhetoric or unexpected geopolitical escalations. The TACO rule of thumb (‘Trump Always Chickens Out’) tempers panic, but does not eliminate headline risks. Moreover, if trade tariff easing fails to materialise, the fundamentals underpinning the current market will disappear, making renewed volatility inevitable. With strategic discipline and risk management, smart investors are creating room to exploit short-term opportunities.'
A solid spread across regions, sectors and asset classes is not a luxury, but a necessity.
