Unpredictable

The world economy is forecast to be unpredictable in 2025 with many economic relations being very tense. The world economy is forecast to continue to maintain a strong growth rate, but may also fall into a state of stagflation (economic stagnation while inflation is high).

Inflation is at risk of rising again. The trade war that Donald Trump has restarted with China and many other countries may cause commodity prices to skyrocket, gold prices to continue to climb and the US dollar to strengthen.

The USD has increased sharply in recent times, if it continues to increase it will cause new storms in the global financial and monetary markets. It can lead to a withdrawal of indirect investment capital in many emerging markets, thereby putting pressure on exchange rates and economic stability in countries, including Vietnam.

Stagflation is a bad scenario and has been warned by some experts due to concerns about Donald Trump’s strong statements on trade and immigration. This scenario occurs when the US economy can “hard land”, recession and will affect most countries, especially China, Europe and Vietnam is no exception.

In a new report, the world's largest money manager, BlackRock, said the US economy could still suffer a hard landing if President Donald Trump makes any policy mistakes. Inflation, which has been persistent, could rise further due to demand. Economic growth will slow significantly and valuations of companies in the artificial intelligence (AI) sector will be severely affected. The AI ​​bubble will burst.

However, in general, most reports still have a more positive view than economic forecasts made in the first half of 2024, including big names such as BlackRock, Goldman Sachs, S&P Global...

In a recently released report, Goldman Sachs forecasts that the global economy will continue to recover steadily in 2025 with an increase of 2.7%. The US economy will grow much faster than expected, reaching 2.5% compared to 1.9%, according to a Bloomberg survey of economists.

Previously, according to the forecast of the Organization for Economic Cooperation and Development (OECD), the global economy will grow 3.3% in 2025, compared to an estimated 3.2% in 2024. The world economy remains "resilient despite significant challenges".

The euro zone is forecast to grow just 0.8%, according to Goldman Sachs, much lower than the 1.2% forecast by economists surveyed by Bloomberg, due to potential trade policies under President-elect Donald Trump.

In fact, right after Mr. Trump won the election, the world financial market changed a lot. The USD increased sharply, countries accelerated the rate of interest rate cuts. China pumped money to support the economy...

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Inflation, gold prices, and the US dollar are expected to increase in 2025 under Donald Trump. Photo: NWC

How are the prices of gold and USD, and how are they affecting Vietnam's economy?

According to S&P Global, inflationary pressures will increase in 2025 and the US will likely stop cutting interest rates earlier. The USD will then be stronger.

Goldman Sachs has also adjusted its forecast for the US Federal Reserve's interest rate path for 2025. Accordingly, the Fed will not have any cuts in January. Interest rates are expected to decrease in March, June and September. The end-of-cycle interest rate will be slightly higher, at 3.5-3.75%, compared to the previous forecast of 3.25-3.5%/year.

Gold prices are still benefiting from the US and other countries' interest rate cuts and demand from central banks, but the pace of growth in 2025, according to the World Gold Council (WGC), could slow if the wave of interest rate cuts is reversed.

On Kitco, according to MKS PAMP expert Nicky Shiels, gold prices will be more volatile in 2025 but the path to $3,000/ounce will be narrower. Gold is forecast to fluctuate quite widely between $2,500-3,200/ounce. Gold will average $2,750/ounce in 2025, up 14% from 2024.

According to Ms. Nicky Shiels, it all depends on whether the Fed reacts before or after the inflation signals of the US under Mr. Trump. If the Fed is less cautious, real interest rates will fall and the dollar will weaken in the second half of 2025, gold prices will rise to the threshold of $ 3,000.

According to S&P Global, the extent of the impact of policies remains an important unknown. The global macroeconomic outlook depends on the implementation of trade and immigration policies of the Trump administration.

The US economic outlook also affects the economic growth rate of many countries, including Vietnam.

In theory, the US economy could still have a hard landing, but according to organizations, this possibility is not high. The US economy may slow down (compared to 2.9% in 2023 and about 2.8% in 2024), inflation may also increase. However, the business activities of this business community may still be positive thanks to Mr. Trump's strong tax reduction policies.

Besides, if the hot field and the large cash flow of the US AI still maintains a positive outlook, the world's No. 1 stock market will still go up even though it has set a new record high dozens of times in 2024. The US economy will benefit. On the contrary, the situation will be quite bad.

For Vietnam, rapid and strong international fluctuations will create many new variables for the economy.

Speaking at a conference in mid-December, economist Dr. Nguyen Tri Hieu said that Vietnam's economy is strongly affected by Mr. Trump's aggressive trade protection policy. However, Mr. Barry Weisblatt David, Director of Analysis at VnDirect Securities Company, said that Mr. Trump's upcoming policy of imposing tariffs on China, Mexico, and Canada will bring opportunities for Vietnam.

Forecasting inflation risks will cause the USD to hang high and the VND to be under a lot of pressure. VnDirect experts leave open the possibility that the State Bank will have to raise interest rates if exchange rate pressure gets out of control.

Mr. Barry commented that the US may not impose additional tariffs on Vietnam during Mr. Trump’s second term because Mr. Trump has good relations with Vietnam. The US will focus more on trade defense measures, especially the origin of goods exported to the US.

According to Dr. Luong Van Khoi, Deputy Director of the Central Institute for Economic Management (CIEM), US policy towards China will change and investment capital flows into China may shift to Vietnam.

China's financial market was shaken after two tax "declarations" from Mr. Trump . China's financial and monetary markets were shaken at the beginning of the new month after bad signals from the domestic economy and statements on the social network Truth Social by US President-elect Donald Trump.