Foreword

2024 was a landmark year for global democracy, with a record number of voters participating in elections worldwide. In total, 64 countries and the European Union—representing nearly half of the world’s population—went to the polls. These elections brought significant governmental shifts, leading to policy changes with far-reaching impacts on employment and the workforce.

As these legislative transformations take effect in 2025, this report—crafted by our partners working within their respective regions—delivers a comprehensive analysis of economic, employment, and social trends shaping the year ahead.

ASIA

Australia

Australia is set for a national election in 2025, with all States and Territories heading to the polls.

As of 30 June 2024, Australia’s population reached 27,204,809, reflecting a 2.1% annual increase. This growth was driven by a natural increase of 106,400 and net overseas migration of 445,600.

The economy continued its 12th consecutive quarter of growth, with GDP rising 0.3% in the September quarter, primarily fueled by government spending and public capital investment. However, overall economic growth for the year stood at 0.8%, the slowest pace since the COVID-19 downturn in late 2020. In seasonally adjusted chain volume terms, GDP grew 0.3%, while nominal GDP rose 0.4%. The terms of trade declined by 2.5%, and the household savings-to-income ratio increased from 2.4% to 3.2%.

In December 2024, the unemployment rate remained at 4%, and the participation rate held steady at 67.1%. Employment increased to 14,573,800, whilst the employment-to-population ratio remained at 64.4%.

Source Australian Bureau of Statistics

The Australian cash rate target is 4.35 per cent and the interest rate paid on Exchange Settlement balances is 4.25 per cent.

Underlying inflation remains too high; however, inflation has fallen since its peak in 2022.  Measures of underlying inflation are around 3½ per cent, which is still some way from the 2.5 per cent midpoint of the inflation target.

Output growth has been weak. National accounts for the September quarter show that the economy grew by only 0.8 per cent over the past year. Outside of the COVID-19 pandemic, this is the slowest pace of growth since the early 1990s.

Past declines in real disposable income and the ongoing effect of restrictive financial conditions continued to weigh on household consumption spending, particularly on discretionary items.

China

China's economic outlook for 2025 indicates a slowing growth rate, with most analysts predicting a GDP expansion of around 4.5%, primarily due to weak consumer demand, a struggling real estate market, and potential impacts from US tariffs, with concerns about further economic stress and potential for public dissent if growth continues to weaken.

Key points about China's 2025 economic outlook:

Slower Growth:

Most experts anticipate China's economic growth to slow down further in 2025, with predictions of around 4.5% compared to previous years.

Consumer Demand Concerns:

Weak consumer spending is seen as a major risk to the economy, impacting retail sectors and overall economic activity.

Real Estate Market Challenges:

Ongoing issues in the real estate sector, including declining prices and high debt levels, are a significant concern.

Government Stimulus Measures:

The Chinese government is expected to implement further stimulus policies to counteract the slowdown, including potential monetary easing.

Trade Tensions:

Potential impacts from US tariffs could further dampen economic growth.

India

India’s Economic Outlook for 2025

The Indian economy demonstrated remarkable resilience in 2024, recording a GDP growth rate of approximately 7%, despite global uncertainties. This performance was bolstered by continued government investments in infrastructure and manufacturing, positioning India as a key global production hub through initiatives such as ‘Make in India’ and ‘Atmanirbhar Bharat’. The re-election of the Modi government in 2024 further strengthened market confidence, with investors anticipating sustained economic reforms and policy continuity.

As India enters 2025, the outlook remains bullish, even as major global institutions like the World Bank and IMF predict a slowdown in global growth. With regional conflicts affecting economies worldwide, India continues its steady march toward becoming a $5 trillion economy by 2027-28 (Economic Times).

GDP Growth Forecast for 2025

India is projected to grow at 6.6% in 2025, making it the fastest-growing major emerging market, ahead of China and Brazil. In contrast, the OECD has forecasted global GDP growth at 3.2% (Economic Times).

Job Market Outlook

India’s labour market remains resilient despite challenges related to rising unemployment and a skills gap. According to the ManpowerGroup Employment Outlook Survey, hiring sentiment for Jan-March 2025 is 15 percentage points above the global average. The top five hiring sectors for 2025 are:

1.        Information Technology (IT)

2.        Financial Services & Real Estate

3.        Consumer Goods & Services

4.        Energy & Utilities

5.        Healthcare & Life Sciences (ManpowerGroup Survey, Economic Times)

Inflation & Monetary Policy

Headline inflation is projected to average 4.2% in 2025, with food inflation declining to 4.6% due to adequate rainfall and a strong summer crop yield. Analysts expect India’s central bank to cut interest rates by 25 basis points in early 2025, while remaining cautious about inflationary pressures (Goldman Sachs Insights).

Stock Market Outlook

According to Goldman Sachs Research, India’s equities are expected to perform strongly in the medium term, with the NIFTY projected to reach 27,000 by end-2025. Growth will be driven by high-performing sectors such as automobiles, telecommunications, insurance, real estate, and e-commerce (Goldman Sachs Insights).

Long-Term Economic Prospects

Despite short-term challenges, India’s medium-term outlook remains robust. The country is on track to become the world’s third-largest economy within five years, trailing only behind the U.S. and China (Economic Times). As India continues transforming into a global economic powerhouse, it is poised to emerge as a key driver of global growth in the coming decade.

New Zealand

Economic Outlook for New Zealand

New Zealand’s economy faced significant challenges in 2024, with widespread consensus among economists that the year can largely be written off as a period of contraction and stagnation. Preliminary data suggests that GDP likely shrank by 0.1%, marking a challenging year for the nation. However, a brighter economic outlook is forecast for 2025, with expectations of a gradual recovery driven by monetary easing, improved domestic conditions, and stabilising financial markets.

2025: Signs of Recovery

Despite the headwinds of 2024, 2025 is expected to mark the beginning of a recovery. The ANZ’s latest economic outlook forecasts modest GDP growth of 1.1% for the year, supported by the RBNZ’s accommodative monetary policies. Interest rates are projected to fall significantly, with the official cash rate (OCR) expected to reach 3.5% by mid-2025 (currently 4.25%). This reduction will lower borrowing costs, ease credit conditions, and stimulate domestic demand.

The stabilisation of house prices and a softer New Zealand dollar are also likely to support improved financial conditions. These developments, coupled with falling debt-servicing costs and recovering real incomes, should drive a cyclical upswing in consumption and investment. Firms are expected to ramp up capital expenditure, addressing project delays from prior years.

Key Challenges

While the recovery is promising, it is not without risks. Labour market conditions are expected to deteriorate further in the year's first half, with unemployment peaking at 5.5% before gradually declining. Globally, the economic policies of Donald Trump’s newly elected U.S. administration are anticipated to create additional uncertainty. Increased protectionism in the U.S. could weaken global demand, indirectly affecting New Zealand’s export-reliant sectors.

Looking Ahead: 2026 and Beyond

While 2025 is forecast to deliver modest growth, the recovery is expected to gain momentum in 2026, with GDP growth projected to accelerate to 3%. By then, the combination of lower interest rates, improved labour market conditions, and normalised monetary policies should provide a stronger foundation for sustained economic expansion.

Singapore

After a year of slowdown and uncertainty in 2024, Singapore’s economy is expected to grow moderately in 2025, with the Ministry of Trade and Industry (MTI) forecasting GDP expansion between 1% and 3%. While trade-related sectors and modern services will continue to drive recovery, global geopolitical uncertainties and a stronger Singapore dollar may challenge exports.

Economic recovery will be supported by monetary easing, stabilising global demand, and resilient domestic consumption. The Monetary Authority of Singapore (MAS) is likely to adjust its exchange rate policy, easing pressure on trade-driven industries. Growth is expected to be led by financial services, technology, and green sectors while moderating inflation and lower interest rates should boost consumer spending and business confidence.

However, external risks remain a concern. A slower-than-expected recovery in China and the U.S. and ongoing trade disruptions could impact Singapore’s open economy. The labour market may tighten, particularly in sectors reliant on foreign talent, while businesses navigate higher operating costs and evolving regulations.

Looking ahead, 2026 is expected to bring stronger momentum, with GDP growth projected at 3%, driven by private sector investment, digital transformation, and sustainability initiatives. As Singapore adapts to a shifting global trade landscape, it remains poised to reinforce its role as a financial and innovation hub in Asia.

 

AMERICAS

USA

The U.S. economy enters 2025 cautiously optimistic, as all business sectors show some improvement despite ongoing volatility. Variable remuneration, including annual and long-term bonuses, remains difficult to attain, with many companies struggling to meet board-mandated performance targets. Business failures have surged, reaching nearly 20% in some sub-markets, underscoring persistent economic pressures.

The new Trump administration has reignited its “Make America Great Again” economic agenda, focusing on deregulation, tax cuts, and domestic industry growth. While these policies aim to boost job creation and stimulate investment, they also introduce uncertainty in global trade relations and potential shifts in monetary policy. Companies remain cautious, awaiting more precise signals on trade agreements, tariffs, and corporate tax structures.

Adding to the complexity, recent severe weather events, particularly in California, have disrupted supply chains and economic stability. This, combined with market reactions to Trump’s economic and foreign policies, has fueled volatility beyond U.S. borders, impacting global financial markets.

Despite these headwinds, economic resilience remains strong, driven by consumer spending, technological advancements, and steady employment. If pro-business policies successfully stimulate domestic manufacturing and infrastructure investment, 2025 could mark the beginning of renewed economic expansion. However, businesses must remain agile in navigating policy shifts and global market dynamics.

Brazil

2024 Brazilian Economy

Brazil's GDP growth reached 3.1% in 2024 (Oct. 2023 - Sept. 2024), with forecasts indicating a slowdown to 2.0% in 2025. The 2024 inflation rate underperformed at 4.83%, against a target of 3.00%, with similar projections for 2025 at 4.20%.

The Central Bank of Brazil reduced SELIC rates from 11.75% to 10.50% during the first three quarters but raised them to 12.25% in the fourth quarter of 2024 to combat currency devaluation, which reached 26.38% due to excessive government spending.

Unemployment decreased to 6.4% in October 2024, with the workforce reaching 100.7 million. Brazil maintains its position amongst the top 10 global economies, with a GNP exceeding US$ 2.13 trillion.

Following the success of PIX, Brazil's instant payment system, the Central Bank plans to introduce 'Drex' in 2025—a blockchain-based digital currency designed to secure financial transactions through a unified platform, operating independently from traditional banking systems.

Canada

Canada faces significant economic challenges in December 2024, with the federal deficit reaching $61.9 billion, exceeding targets by 50%. Finance Minister Chrystia Freeland's resignation and potential 25% US tariffs under President Trump's return create economic uncertainty. The Bank of Canada has responded by lowering interest rates to 3.25%.

Despite these challenges, growth sectors are emerging. Air Canada projects 36% revenue growth by 2028, whilst the hydrogen industry has attracted $100 billion in investments across 80 low-carbon projects.

The government is adjusting immigration policies, reducing permanent resident targets from 485,000 to 395,000 in 2025 to address housing pressures. Meanwhile, the TSX shows continued strength, supported by rising metal prices and favourable interest rates.

The primary concerns remain the impact of potential US tariffs on Canada's export-driven economy, particularly affecting automotive, agriculture and natural resource sectors. However, the emergence of clean energy projects and aviation sector growth provide positive counterbalance for economic outlook.

Europe

Bulgaria

GDP growth is forecast to accelerate from 2.4% in 2024 to around 3% in 2025 and 2026, supported by domestic demand and exports. The expansion in income is set to underpin robust private consumption growth.

The unemployment rate remained low amid limited labour shedding in the manufacturing sector, offset by intensive hiring in the public sector and services.

In 2025, inflation is set to abate to 2.3%, benefiting from negative energy inflation and low industrial goods inflation, as well as from base effects from the price hikes in tourist services in 2024. Headline inflation in 2026 is expected to edge up, driven by services inflation. 

Denmark

Denmark’s Economic and Business Landscape in 2025

Denmark's 2025 economic outlook shows strong stability, with GDP forecast to grow by 2.9%. The economy is bolstered by a robust pharmaceutical sector, led by Novo Nordisk's success, and significant renewable energy projects, including the North Sea Energy Island initiative.

The country maintains one of Europe's lowest unemployment rates, though this creates recruitment challenges, particularly in specialised fields. Public debt remains well-managed at 25.1% of GDP, with a government surplus of 1.4%.

Key regulatory changes for 2025 include updated salary thresholds for foreign workers and a new Bookkeeping Act mandating digital systems. The pharmaceutical sector contributes nearly 5% to GDP, whilst renewable energy projects advance Denmark's ambitious 70% emissions reduction target by 2030.

Despite challenges in the labour market and the need to adapt to new regulations, Denmark's focus on innovation, particularly in life sciences, renewable energy, and digital technologies, positions it favourably for continued growth and investment opportunities.

France

Economic forecast for France

France's GDP growth is forecast to slow to 0.8% in 2025, primarily due to fiscal adjustment, though supported by monetary policy easing. The government deficit is expected to reach 6.2% of GDP in 2024 before declining to 5.3% in 2025, while public debt is projected to increase to 117% of GDP by 2026.

Domestic demand will be the main growth driver in 2025, with private consumption supported by disinflation and real wage increases. However, private investment is expected to remain subdued due to economic uncertainty.

The labour market shows signs of softening, with employment growth slowing to 0.1% in 2025 and unemployment rising slightly to 7.5%. Inflation is projected to ease to 1.9% in 2025, remaining below the ECB target.

The government has introduced a significant fiscal package in its draft budget, including revenue-increasing measures worth €21.6 billion (0.7% of GDP), aimed at reducing the deficit while managing the increasing public debt burden.

Finland

The Bank of Finland forecasts the economy will contract by 0.5% in 2024 before growing by 0.8% in 2025 and 1.8% in 2026, settling at 1.3% in 2027. Consumer spending recovery will be initially slow due to weak confidence and rising unemployment, though expected interest rate reductions should provide support.

The investment outlook is mixed, with non-residential investment increasing in 2025, while residential construction recovery will take longer. Exports are expected to improve gradually from 2025, though growth may be constrained by subdued euro area performance and potential US trade policy changes.

Inflation will remain below 2% throughout the forecast period. Despite government fiscal adjustment measures, the public deficit will reach 4% of GDP in 2024, not falling below 3% until 2027. The public debt ratio is projected to rise to 87% by 2027, indicating an unsustainable debt accumulation path with a 2% sustainability gap.

Germany

Germany's 2025 economic outlook projects minimal growth (less than 1% or negative), influenced by ongoing energy challenges, inflation above 2%, and structural industry changes.

The energy transition away from Russian gas and nuclear power has led to higher costs, while the automotive sector struggles with the shift to electric vehicles. The country faces multiple challenges: investing in green technology, digitalisation and defence while managing budgetary constraints. Construction, real estate and infrastructure sectors are particularly affected.

Labour shortages persist due to an ageing population, despite low unemployment. Wage pressures continue to contribute to inflation risks.

As a major exporter, Germany is working to diversify its trade relationships and supply chains amid geopolitical tensions with China and the US. The economic recovery depends mainly on the successful management of industrial transformation and energy transition, alongside effective political measures to address these challenges.

Italy

Real GDP is expected to grow by 0.7% in 2024, supported by investment and falling imports. Economic activity is set to expand by 1% and 1.2% in 2025 and 2026, respectively, as consumption picks up and RRP-related spending accelerates. Inflation is forecast to drop to 1.1% this year, rise to 1.9% in 2025 and fall slightly again in 2026.

The phase-out of sizeable housing tax credits and buoyant revenue are expected to push the government deficit significantly down in 2024 to 3.8% of GDP. The deficit is forecast to fall further in 2025 and 2026, just below 3% of GDP.

Employment is expected to increase by 1.6% this year, after 1.9% in 2023, and to decelerate further in 2025-26. As job opportunities continue to improve, the increase in labour market participation is set to outpace the projected decline in working-age population over the forecast horizon. The unemployment rate is thus set to decrease to 6.2% in 2026

Norway

GNP AND INTEREST RATES

With 5.5 million inhabitants, Norway maintains a strong economy with a per capita GNP of €80,400 and total GNP of €437 billion, showing a 1.4% increase over the past year. Inflation stands at 2.9%, while unemployment remains low at 3.6%.

Interest rates have held steady but are expected to decrease by 0.5-1.0% through 2025. Consumer confidence has improved slightly, though private consumption remains below government targets. The real estate market continues to struggle post-COVID-19, affecting the construction industry.

While imports remained stable in 2024, exports grew, particularly seafood. The energy sector, including oil, gas, wind, and hydro, remains crucial to Norway's economy. Financial returns have been modest despite significant investment in environmental-friendly energy initiatives, including battery factories.

A general election in September 2025 will bring political changes based on recent polling trends.

Spain

Spain’s growth is expected to surpass the eurozone average as Caixa Bank Research projects a 2.3% growth for Spain in 2025, compared to an estimated 1.3% for the eurozone driven by robust domestic demand and sustained investment recovery. According to recent forecasts, the Spanish economy is expected to experience solid growth in 2025, with a projected GDP increase ranging from 2.1% to 2.5%. The Bank of Spain anticipates a 2.5% rise, while BBVA estimates a 2.1% growth.

This growth will primarily be driven by domestic demand, with private consumption and investment playing key roles.

Investment

Investment will be another growth driver, particularly in equipment goods and construction. The Chamber of Spain estimates a 3.4% increase in investment in equipment goods and a 3% increase in construction investment, supported by favourable financing conditions and the implementation of European funds. However, investment remains the most delayed variable in recovering to pre-pandemic levels. Gross Fixed Capital Formation reached 99.6% of Q4 2019 levels by Q3 2024, showing a lag in equipment goods.

Monetary Policy and Credit

The European Central Bank's (ECB) monetary policy will influence financing conditions. An interest rate reduction of -100 basis points in 2024 and at least -75 basis points in 2025 is anticipated. This scenario will facilitate the deleveraging of companies and households.

Conclusion

Spain's economic outlook 2025 appears favourable, with projected growth rates exceeding the European average, driven by robust domestic demand and sustained investment recovery.

Sweden

Sweden's 2025 major policy changes include significant budget increases across key sectors:

• Justice system: SEK 86.7 billion (+SEK 3.46 billion) for crime prevention and gang violence
• Defence: SEK 138 billion (+SEK 13 billion, 10% increase)
• Infrastructure: SEK 200 billion increase in transport
• Research: SEK 6.5 billion boosts by 2028 for innovation

The government has implemented stricter asylum and citizenship policies while maintaining its commitment to net-zero emissions by 2045 through industry electrification and transport sector transformation.

The labour market shows regional variations, with northern Sweden benefiting from green investments while metropolitan areas expect slower recovery.

Key growth sectors for 2025:

• Renewable energy (wind, hydro, biomass)
• E-commerce and digital platforms
• Healthtech (telemedicine, digital health records)
• Fintech (mobile payments, digital banking)
• Gaming and e-sports
• Sustainable construction with a focus on new materials and automation

These initiatives reflect Sweden's focus on security, sustainability, digital transformation, and economic growth while addressing social challenges.

UK

United Kingdom: Economic Outlook for 2025

The UK economy enters 2025 with mixed signals, as GDP growth is projected at 1.7%, supported by fiscal expansion, while inflation remains elevated at 2.4%. Interest rates are expected to gradually decline to 4.00%, offering some relief to businesses and consumers. However, ongoing trade friction and global economic uncertainties may dampen external demand.

The newly elected Labour government has introduced sweeping employment law reforms, marking one of the most significant shifts in recent years. Key changes include “day one” protection against unfair dismissal (effective autumn 2026), expanded statutory rights for sick pay, parental leave, bereavement leave, and maternity protection. New restrictions on “fire and rehire” practices, guaranteed hours for zero-hours contracts, and compensation for cancelled or shortened shifts add further compliance requirements for employers. Additionally, businesses must now provide reasonable justification for rejecting flexible working requests.

The labour market faces ongoing challenges, with talent shortages persisting in healthcare, the public sector, manufacturing, and financial services. Changes to employers' National Insurance contributions are prompting companies to reassess hiring strategies, with increased reliance on interim management expected in the first half of 2025.

While these labour market reforms bring greater worker protections, they also add complexity for employers navigating an economy still grappling with inflationary pressures and trade uncertainties. The coming year will test the resilience of businesses as they adapt to regulatory changes while seeking growth in a shifting economic landscape.