Welcome back to 2025! As days at the beach or in the water fast fade into the rearview mirror one is left to look ahead to what 2025 will bring. I spent a bit of time reading over the break and as an avid ‘The Economist’ reader, I happened upon a number articles in their The World Ahead 2025 special. I’ve taken a few snippets from this and used them to help form my thoughts on some key themes for the year ahead…
“The craze for artificial intelligence will help total IT spending grow faster, rising 8% to $3.6trn in 2025”
As it becomes more mainstream, individuals and businesses are finding AI indispensable. The level of investment in AI has gone nuclear (pun intended!), with the economist estimating spend on AI data centres expected to exceed 1.4trn(!) between 2024 and 2027! So with all this hype and activity will the bubble burst or will AI start to deliver? My pick is the latter. Assuming so, existing issues such as technical debt, process misalignment and workforce engagement/capability will need to be resolved before AI can start to really move the dial. Businesses will need to start to invest in activities such as process automation, data quality/integration/governance, business analysis, change management and digital skills or risk being left behind as the AI train rolls on past…
“…worries about humans passing their prime, about 12% of them are aged over 65”
An ageing workforce, flexible working conditions, the continuing demands to ‘do less with more’, skill shortages and workforce mobility all blend to make the labour market more complicated than ever before. The best employers see the value of being flexible/reasonable and responding to people’s personal needs in order to get the best out of them. The pragmatist in me hopes that this will continue this year. Labour shortages for skilled roles will always be an issue, but I’m picking nowhere near the issue it was a couple of years ago. Whatever happens, emotional intelligence and adaptive thinking remain at the top of my list of ‘superpowers’ in demand in 2025.
“Lower inflation encourages central banks…. to cut interest rates further—and prompts consumers to go shopping”
This is probably the best news. The cutting of interest rates started last year looks set to continue. The economists tell you that this will spark increased demand and brighter times economically. My personal view is that this will happen but it won’t be a rapid bounce. Businesses are still licking their wounds from a pretty dismal 2023 and 2024 and it will take time for the confidence to (re)commence large capital projects to return. Add wild cards such as adverse weather patterns, power prices, political unrest and infrastructure/supply chain issues and it’s fair to say that it’s a bit early to pop the champagne in 2025!
…and of course… political uncertainty/volatility.
Donald Trump’s upcoming inauguration springs to mind when you bring up this topic! When you add the recent departure of Canada’s Justin Trudeau and a number of European countries undergoing political turmoil (Germany, UK and France to name a few!), then we see a pattern across some of our most important trading partners. What will this mean for us? In New Zealand the focus still appears to be fixing structural issues and controlling spend, but at some point (especially given that 2026 is an election year!) you would think some growth initiatives will need to surface. Impossible to predict what lies ahead politically and what it means for the wider economic and social landscape, but it’s fair to say that when it comes to Western Democracies, the only thing that remains stable is instability itself!
So, in short, continuing tough times for 2025, but not quite as tough as 2024. The consensus is that things are looking brighter, but that it will be a slow dawn and maybe a cloudy day! That’s my take anyway!
Happy New Year and best wishes for 2025”
Cheers,
James
Not quite what you’re looking for?
Other blogs
of interest
