Businesses operating in today’s geopolitical environment face a volatile period in 2025. But volatility can bring opportunity.
Those that consider risks and challenges systematically will be well placed to capitalise on the opportunities the shifting geopolitical landscape offers.
That means more holistically assessing the drivers of new trade, economic and industrial policies as they emerge, as well as the defence and security factors which are going to feature in 2025.
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A few key factors loom. First, of course, is trade policy – highlighted by the wide-ranging tariffs unveiled by the United States. These and future tariff measures will likely open new, alternate trade corridors - and businesses that keep a close eye on those markets not tariffing each other could find opportunities.
Geopolitical developments can also encourage the streamlining of core business operations. Many corporates may not have thought about those things for some time, and the current period may prompt a reassessment.
Finally, with new government funding streams coming via industrial policies we're getting used to, there are advantages on offer for domestic production or supply-chain localisation.
Tethered
Geopolitical events in 2025 are going to be less tethered to the institutions of the post-World War liberal international order; institutions we've grown accustomed to over the last 50 to 70 years.
That's going to be driven by countries that don't feel that the system benefits them. Interestingly, under the Trump administration, the United States joins a growing group of emerging markets and a more aligned grouping of Russia, China, Iran and North Korea that feel this way.
The year 2025 is shaping up as another exciting one for businesses, with persistent inflation and geopolitical change creating a landscape of uncertainty and opportunity in the Asia-Pacific region.
The increasing speed of digitisation, dawn of the real-time economy, and shifting supply chains will all also have a role to play in shaping the macroeconomic environment.
At ANZ Institutional, we know business are looking to position themselves to take advantage of these trends.
As part of our Outlook 2025 series, we’re asking our subject-matter experts to provide insights into a range of complex areas from across close to 30 markets – helping you better understand how you can prepare for the New Year. We’ll be sharing the responses over the coming weeks.
Divergent
In 2025, expect an increasingly multi-polar world to complicate the global economy with divergent standards and systems for cross-border business activities.
So far global trade and investment has endured pretty well amid the rising US and China competition of the past decade - mostly because China trade and investment flows have been rerouted via non-aligned connector countries. Expect this to continue.
The risk in 2025 is those connector countries, and the Chinese companies that have been investing in them to circumvent US tariffs and other restrictions, become a focus for the Trump administration.
Cameron Mitchell is Head of Geopolitical Risk at ANZ
