Are you ready for 2025?

After a whirlwind of disruption in the early 2020s – ranging from a global pandemic to spiralling inflation and aggressive interest rate hikes – the world economy appears to be catching its breath. But with global growth forecast to remain under 3 per cent, 2025 brings a pivotal question: will we see a return to stability, or are we still bracing for the next curve?

 

Convera’s Are You Ready for 2025? report explores key trends, risks and opportunities for businesses as we enter what could be a stabilising year, or the calm before another storm.

 

As a global leader in commercial payments, with deep expertise in foreign exchange risk and cross-border payments, Convera helps more than 26,000 customers around the world navigate the ever-shifting currency markets that underpin global commerce. Whether you’re a small business owner, CFO or treasurer, the Are You Ready for 2025? report will help position you to succeed in the year ahead.

 

Finding opportunity amid uncertainty

 

2025 could bring both relief and new challenges. Inflation is finally easing towards central bank targets, real wages are ticking upward and potential interest rate reductions could provide some breathing room for businesses and consumers alike.

 

However, the slow pace of growth indicates that the global economy is still grappling with the long-term effects of recent shocks. Pre-pandemic expansion rates are a distant memory, and as a result, businesses must stay agile, proactive and ready to adapt to sudden shifts.

 

A primary area of concern identified in the report is the labour market. Unemployment rates remain low, but declining demand could spell trouble, potentially pushing up joblessness and curbing consumer spending – the cornerstone of many economies. If this scenario unfolds, businesses will need to tighten their focus on efficiency, invest in risk management and stay vigilant for changes in consumer behaviour.

 

Navigating a fragmented global economy

 

Different regions will present unique opportunities and challenges as we move into 2025. The US economy has outperformed expectations in 2024, growing by over 2 per cent in seven of the past eight quarters. This growth, driven by strong consumer spending and a robust labour market, is expected to moderate slightly in 2025, with a projected GDP growth of 1.9 per cent.

 

Meanwhile, Canada’s economy faces a potential downturn as a wave of mortgage renewals at higher interest rates threatens household spending. While the country has shown modest growth, it is still 3 per cent below pre-pandemic levels, leaving it vulnerable to further economic pressures. Meanwhile, the Eurozone continues to struggle, particularly Germany, which is grappling with industrial slowdowns.

 

Central banks around the world face the delicate task of balancing growth with inflation control. Easing interest rates will provide some relief, but they must be careful not to cut too aggressively, lest they reignite inflation. This balancing act means FX risk management will be more essential than ever for businesses navigating these shifts.

 

What does this mean for FX?

 

2025 could be a year of rebalancing – or renewed volatility. The US dollar, which has dominated global trade for years, may see its strength wane as central banks adopt looser monetary policies. While a softer dollar could reduce trade imbalances and lower debt-servicing costs for many countries, the opposite could happen if geopolitical surprises or slower-than-expected rate cuts give the dollar a second wind.

 

When it comes to the major currency pairs, businesses should consider the following:

• EUR/USD: The euro has struggled to gain momentum due to sluggish economic growth in the Eurozone, while the US dollar’s resilience has been underpinned by strong performance. If the European Central Bank continues to ease monetary policy, expect further downward pressure on the euro.
• GBP/USD: Sterling has been a surprising outperformer, buoyed by political stability and strong economic fundamentals. While the Bank of England is expected to continue to cut rates in 2025, the pound may maintain its strength thanks to favourable yield differentials.
• USD/CAD: The Canadian dollar has remained relatively stable, but with the Bank of Canada likely to cut rates further in 2025, there’s a risk of depreciation, especially if Canada’s growth lags behind that of its southern neighbour.

Ready to thrive?

 

The path forward may be uncertain, but preparation is the key to thriving in a shifting economic environment. As the world economy inches toward balance, businesses must be nimble, informed and ready to respond to whatever comes next.

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Download the full Are You Ready for 2025? report to explore how your business can navigate these challenges and capitalise on the opportunities ahead.

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By Steven Dooley, Head of Market Insights, Convera