Geopolitical and trade tensions force businesses to review strategies

As we approach 2025, businesses across six major sectors—automotive, energy, finance, healthcare, retail and technology—are bracing for a year of continued uncertainty. EIU’s 14th annual industry report paints a complex picture of the global economic landscape, dominated by persistent geopolitical tensions, trade disruptions and climate challenges.

US-China relations in focus

One of the most pressing concerns for businesses in 2025 is the deteriorating relationship between China and the United States. Trade tensions between these two economic superpowers are forcing companies to rethink their strategies and adjust their supply chains to navigate a world increasingly divided along geopolitical lines. In addition to rising tariff barriers, businesses face a growing patchwork of regulations on data, tax and intellectual property that further complicates operations across borders.

According to EIU’s report, these challenges will contribute to modest global economic growth, with real GDP expected to rise by just 2.6% as developed economies experience a slowdown.

Global conflicts and their economic impact

Ongoing conflicts, particularly in Ukraine and the Middle East, will continue to cast a shadow over global stability. The war in Gaza and Lebanon is forecast to partially de-escalate in 2025, leading to a softening in Brent crude oil prices to around US$77/barrel. However, EIU warns that a wider conflict—estimated at a 30% probability—could drive oil prices above US$100/barrel, while also leading to steep rises in shipping and insurance costs for global trade.

The outcome of the US presidential election is another factor to watch. Should Donald Trump return to office, EIU expects higher trade barriers not only with China but with several other US trading partners. International efforts to tackle climate change are also expected to be derailed.

Sector-specific forecasts for 2025

EIU’s report highlights key growth areas and challenges across the six sectors:

  • Energy: Fossil-fuel markets will continue to face geopolitical risks amid conflicts in the Middle East and Ukraine, but investment into renewables will remain strong, particularly in China.
  • Financial services: Falling interest rates will weigh on bank profit margins, leading to lower dividend payouts, but the Basel III endgame will be eased or delayed further.
  • Consumer goods and retailing: Global retail volumes will expand by 2.2%, helped by disinflation, but regulations around online retailing will tighten further, particularly for high-volume low-price Asian retailers such as Shein and Temu.
  • Technology: Investment, especially in artificial intelligence (AI), will remain strong, but technology companies will face regulatory pressures, investor impatience and scrutiny over energy usage. More countries will start using satellite internet, but use cases will be limited to enterprise clients—military and maritime. Amazon’s Kuiper will disrupt the market duopoly of Starlink and EutelSat OneWeb. 
  • Automotive: After a difficult few years, annual new-vehicle sales will reach a record 97.2m units in 2025. EIU forecasts that sales of new cars will rise by 2%, commercial vehicles by 3% and electric vehicles by 25%.
  • Healthcare: Global healthcare spending will outpace inflation, growing by 1.9% in real terms. The World Health Organisation will make climate change the focus of its 14th four-year general programme, which starts in 2025.

Looking ahead

Ana Nicholls, director of industry analysis at EIU, underscores the uncertainty that will continue to shape global business strategies in 2025.

“Hopes that the world will one day return to normal have been continually dashed since the COVID-19 pandemic, and 2025 will be no different. Although working and travel patterns are normalising, the economic and political outlook remains uncertain. With the wars in Ukraine and the Middle East likely to continue into next year, and US-China trade relations worsening, companies will have to cope with heightened geopolitical tensions, as well as the increasing impact of climate change. We foresee the technology and automotive sectors splintering as regulation diverges too.”

Ana Nicholls, Director of Industry Analysis at EIU

As businesses navigate these challenges, EIU’s Industry outlook 2025 provides valuable insights to help them stay ahead in an increasingly unpredictable world.

For a more detailed analysis, download the full report here.

The analysis featured in this article can be found in EIU’s Country Analysis service. This integrated solution provides unmatched global insights covering the political and economic outlook for nearly 200 countries, enabling organisations to identify prospective opportunities and potential risks.