2024 was a year when interest rates turned lower, when 'normalisation' occurred in the world's largest economies. Inflation was tamed, or at least quelled after the pandemic run-up. Public policy-making settled down to 'normal standards'.
We reviewed how that looked for savers here, and borrowers here.
But 2025 might well be quite different. After all, the world's largest economy will be being led by a recycled Don, a 78 year old grifter with his last chance to cash in. That is sure to generate a wild ride.
And new risks.
Those risks will get priced in. And those risk pricings will wash over us. Costs will probably get distorted. When things inevitably don't work out "for him", blame, retaliation and retribution are likely to twist the policy responses, all of which will raise risk further.
If higher risk is reflected in higher interest rates, yield investments like real estate (both residential and commercial) may have a hard time justifying their current prices.
Unfortunately New Zealand will start the new year uniquely in recession, along with all the social pressures that brings. An unstable global situation is unlikely to be helpful getting us out of recession.
And then there are the geo-political stresses. Who knows where that goes? But perhaps you do?
And there will be climate stress. That too will cause local impacts. Would you invest in petrol stations?, buy on a flood plain? or near coastal lowlands? If you do, will you expect society to bail you out if things go pear-shaped? Should insurers be required to cover those risks and spread the costs over everyone else? Should banks lend when those risks seem obvious.
Will we tolerate un-priced risk any more? Can we resist the socialising of losses? We may have to when public budgets are in growing deficit.
Anyway, there is lots to talk about.
How do you think our economy (housing, agriculture, tourism, education, to name the key sectors in decreasing size) will fare in 2025?
And don't forget those climate predictions. Pretend you are an insurer (or a lender).
Who will be the winners in 2025? The losers?
It is time to test your prediction skills and bravely record them here in the Comment stream below. (Sign up here.)
And of course there is the small matter of bragging rights on your 2024 predictions. How good were they? Here is a quick link to last year's set. More than 200 of you weighed in again last year. Almost 15,000 readers watched that particular debate.
This article is to encourage you to record your 2025 predictions.
Your predictions can be on any topic that has an impact on the New Zealand economy: anything, including property, interest rates, exchange rates, the RBNZ, insurance, rural issues, the dairy payout, our migration issues, our relationship with China, the big international economic influences, even the shifting international power balance, and the like. But please try to ground them in the economy. (For example fashion, sporting or celebrity comments are not relevant, but climate change issues certainly are.)
You will need to be logged in to comment and respect our commenting policies (and respond to others' differing views in a respectful and civil way).
Grab a wine or a beer. Settle in. Over to you.
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