Navigating 2025’s financial landscape

In 2025, investors and savers will be facing a world of tempered growth, changing policy dynamics, and revolutionary market trends. As we navigate the year, understanding the economic outlook, identifying investment opportunities, and embracing resilience strategies will be key, grounded in the latest insights.Global economic growth is projected to remain steady at 2.7% in 2025, matching the 2024 pace but insufficient to make up for years of post-pandemic disruptions and longer-term structural challenges such as weak productivity and high debt levels. Advanced economies will probably outperform their peers, with the U.S. leading, at 2.4% GDP growth in 2025, driven by consumer spending and industrial policies. Meanwhile, in emerging markets, progress is uneven, and low-income countries especially are likely to fall further behind due to debt burdens and climate pressures.This is compared with projected growth for Namibia of 3.8% in 2025, helped by tourism and household spending, while South Africa's projection stands at 1.6% to 2% in economic growth in 2025. Meanwhile, China's slowdown, with the country's growth projected to be 4.5% for 2025, contrasts with India's resilience in anchoring the 6.2% projected regional expansion of South Asia.Global inflation continues to be moderate in 2025, but regional divergence and persistent risks remain. In advanced economies, disinflation has steadily unfolded, and U.S. headline inflation, or PCE, came down to 2.3% at the end of 2024, which allowed the Federal Reserve to cut rates by 100 basis points. However, services inflation, sticky from the high wage pressures and shelter costs, complicates the central banks' effort to reach their 2% targets. In Europe, the inflation rate has cooled to 2.1% supported by the stabilisation of energy prices and tighter monetary policy; longer-run structural factors such as aging and labour shortages might well reignite price pressures at the medium-term horizon.For emerging markets, the outlook remains mixed. For Namibia, inflation is seen easing to 4% in 2025, supported by lower food and fuel prices. The inflation outlook for South Africa is also very similar, at 4.3% for 2025, though the risks of inflation are abundant, driven by currency volatility and rising energy costs. Inflation is still high in parts of Africa because of climate shocks and disruptions to supply chains, though monetary tightening in countries like Nigeria and Kenya has begun to bear fruit.Risks still exist worldwide. Geopolitical tensions, restrictions to trade, and AI-driven energy demand might again push up inflationary pressures, especially in import-dependent or climate, vulnerable regions. Investors should watch these dynamics closely, diversify into inflation, resistant assets such as TIPS and commodities, and remain nimble to respond to changing trends.Megatrends: Opportunities and RisksRenewable energy capacity in Africa is set to grow 20% annually, with Namibia and South Africa leading the charge in green hydrogen and solar projects. Investors look to infrastructure opportunities as the continent positions itself to be a key global clean energy hub.Sub-Saharan Africa witnesses over $1 trillion in annual mobile money transactions, driven by fintech adoption in Kenya, Nigeria, and Ghana. Growth in this market depends on key investments in digital infrastructure and cybersecurity.Supply chains are diversifying, and the reserves of cobalt, lithium, and uranium that Africa has drawn global interest. Namibia and the DRC lead in mining and processing, availing opportunities for value addition and economic diversification.Timeless Principles for 2025Compound growth remains foundational. Invest 10% of your income monthly into a low-cost Unit Trust Fund, such as a money market fund, which is very attractive to the conservative investor. Funds like the Old Mutual Money Market Fund offer low fees and high liquidity, ensuring safety of your investments while earning competitive returns in a volatile environment.Diversify your personal portfolio to include those that will somewhat defend against the erosion of your spending power through inflation. Defensive, low-risk investments provide excellent avenues for safe and stable diversification of financial assets like Treasury Bills, Bonds, NCDs, and High Yield Fixed Deposits. The Old Mutual Money Market Fund offers an excellent opportunity for a stable defence against the erosion of your purchasing power through inflation.It makes sense to take a portfolio rebalancing with the aim to maintain your wanted asset allocation once in a while. This reaps gains on one's investments and cuts on the losses or underperforming asset classes. Speak to your financial adviser, and make sure your investment and retirement savings are optimised for further growth.In 2025, the fabric of high-octane and promising financial periods is interwoven with shifting global trends, regional dynamics, and personal resolutions. As investors, this keeps us on our toes. Mindful of these shifts, we can then traverse uncertainty with clarity and purpose. By making informed decisions today, we secure not only our financial future but also the freedom to enjoy the meaningful moments in life. Let 2025 be a year of growth, both in your portfolio and in your journey toward financial well-being.*Tumelo Thudinyane, assistant portfolio manager at Old Mutual Investment Group.**

Navigating 2025’s financial landscape

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