Some of Trump’s likely policy measures, including tax cuts, less regulation, and a more digital US public sector, could boost growth, support corporate risk, and even reduce concerns about government debt. However, Trump also brings a set of policies that risk being more damaging to the economy, including tariff increases and higher deportations.
Our economists now think US inflation will get stuck above target, growth will be stronger over the next couple of years but weaker further out, and the Federal Reserve will end its rate-cutting cycle in the second half of 2025.
Regional conflicts will also feel the Trump effect. It’s becoming more likely that a fragile ceasefire will be reached in Ukraine next year. In the Middle East, the focus will be on Iran, with increased sanctions or military action possible. The fall of Assad in Syria underlines that volatility will remain elevated in the region, although the impact of oil prices has been modest for now.
We believe Trump's trade policies will impact China and many emerging markets. Tariffs on Chinese imports could rise to 35%–40%. China, in turn, is likely to stimulate more, depreciate the yuan, and retaliate with critical mineral export restrictions or targeting of US companies. The likes of India, Mexico, Korea, and Taiwan could benefit from shifting global supply chains and reduced US reliance on China.
The series
In this last edition of the investment outlook for the year, we examine many of these issues in more detail. Investors from across our asset classes analyze key developments and share insights to help you navigate the year ahead.
- As we approach the end of 2024, our Global Macro Research team looks at the five macroeconomic themes we expect to shape 2025, as outlined in our 5 for '25 report.
- William Hines examines how certain flexible strategies may help fixed income investors navigate economic uncertainties and manage risk in the new year.
- As new governments rise to power with bold promises to transform infrastructure, James McCann, Josh Duitz, and Ivan Wong explore how the stage is being set for a global revolution in building and maintaining our communities.
- Our Multi Asset and Alternative Investment Solutions team delves into how Trump's return could spark a new era for digital assets, with Bitcoin potentially soaring and regulatory changes ahead.
- As economic headwinds gather due to his promised Americas-first policies, Robert Gilhooly provides insight and projections on the potential impact Trump 2.0 may have on emerging markets.
- Finally, as investors begin to get a clearer understanding of the new US presidential administration's agenda and a clearer economic outlook, the US continues to surpass expectations. The combination of alpha and beta in the markets generates numerous new, or at least rekindled, opportunities for hedge fund investors across different strategies. Find out more about the opportunities within hedge fund strategies – Equity, Event-Driven, Macro, and Relative Value – and sub-strategies as Darren Wolf explores the primary drivers supporting our favorable outlook for the asset class in the first half of 2025.
Important information
Projections are offered as opinion and are not reflective of potential performance. Projections are not guaranteed and actual events or results may differ materially.
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