Industry Key Themes 2025: Industrial landscape at a critical juncture
Following prolonged weakness in 2022 and 2023, industrial growth is now regaining momentum.
Industrial growth has accelerated globally from the lows of 2022 and 2023 and is on track to re-converge with GDP growth. The transition has however proven more incomplete in 2024 than forecast, and 2025 is shaping up to be a year that could broaden the liftoff or derail it entirely. There are substantial uncertainties. In this report, we address four key questions shaping the global industry outlook for 2025:
- Will the Trump administration make or break the industrial recovery? Elements of the President-elect’s programme almost certain to be enacted, including fiscal stimulus and corporate tax cuts, are bullish for growth in the near term, with positive spillovers for industry. However, a more far-reaching programme of tariffs on goods and Inflation Reduction Act repeal could derail growth across the world.
- When will European industries recover, and how will that influence global output? Measured by industrial production indices, output has been roughly flat in the US since mid-2022. It is up in China, after significant volatility and low growth during the era of Covid-19 lockdowns, it is depressed aside from electronics in other key Asia-Pacific countries like Korea and Taiwan, and down significantly in Europe, led by Germany, with a 9% contraction since the end of 2022. Will 2025 mark the beginning of a European industrial rebound?
- How will interest rates cuts impact investment and growth in interest-sensitive industrial sectors? Interest rate rises across 2022 and 2023 have been a key factor behind industrial recessions and stagnation across advanced economies. This drag will increasingly fade across 2025, boosting industrial prospects, but positive tailwinds from interest rate cuts will take longer to materialise.
- How will AI influence industrial growth? Productivity-enhancing investments set the stage for medium- and long-run growth, but will also provide a short-term boost for selected industrial sectors. The US in particular is seeing very strong investment in equipment and major corporations are pouring billions into AI-related data centres and capabilities.
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A new world: how Trump and GenAI will impact global industry
In this webinar, we take these two major themes in turn and draw out their sectoral implications. We also identify some of the other major trends that will shape industrial activity for the year ahead.
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