Written by Hamid R. Azarmi, Head of Business Development
As 2025 nears its end, three forces converge: slowing global growth, rising political uncertainty, and AI’s accelerating influence. Navigating this space demands both conviction and flexibility.
Growth Deceleration
The UN’s mid-2025 outlook projects global GDP growth of 2.4 % in 2025, down from 2.9 % in 2024. Notably, U.S. growth is forecast at 1.6 %, China’s at 4.6 %, and India remains a bright spot at around 6.3 %.
Politics Amplifies Risk
With key elections upcoming in the U.S., EU, and India, markets are bracing for policy surprises. Capital is shifting toward defensive assets as fiscal space narrows.
AI: Engine, but also Concentration Risk
AI continues to dominate returns: in 2025, much of the S&P 500’s gain is attributed to AI-linked firms. Global investment in AI infrastructure is rising sharply. While exact figures vary, Big Tech AI capital spending is now measured in hundreds of billions annually, and investors are increasingly cautious about overvaluation.
Regulation Becomes a Frontier
New laws such as California’s SB 53 and the EU’s AI Act mandate risk management, transparency, and accountability for deployed systems. Firms must now treat compliance as a core strategic constraint.
What 2026 May Hold
- Fiscal and monetary policy cues will be decisive
- International alignment (or fragmentation) on AI regulation
- Early signals from election outcomes
In this volatile mix, success hinges on adaptability. Diversify across sectors, track regulatory developments, and prepare for markets shaped as much by law and politics as by earnings.
Sources: United Nations DESA, Washington Post, European Commission, California Legislative Information.
