In 2024, Global geopolitical and national politics experienced tremendous turmoil, with the world economy showing obvious weaknesses, including in Europe, as well as significant highlights represented by the USA. The possible outcomes next year are expected to widen further.

Every December, there is a tradition to summarize the year that is about to end and think about what might happen in the future. This is true for individuals as well: in my family, we often do this at the dinner table. But more broadly, this is also the case; at this time of year, it is necessary to examine the crossroads of the economy, national politics, and Global geopolitics.

It is understandable to expect some consistency among these three areas as a starting point. After all, there is a profound interconnection between them, indicating a self-reinforcing dynamic. However, in 2024, this relationship exhibited some unusual dispersion, which in fact expanded rather than narrowed throughout the year.

Starting with geopolitics, in 2024, Russia gained greater advantages in the conflict in Ukraine than the general predictions made a year ago. Similarly, the human suffering and material destruction caused by the war between Israel and Hamas in Gaza exceeded the expectations of most observers and spread to Other countries such as Lebanon.

The strong have clearly not been punished, and the lack of effective means to prevent severe humanitarian crises has made many feel that the Global order is fundamentally imbalanced and lacks any enforceable red lines.

In terms of domestic politics, many countries have experienced turbulence. The governments of France and Germany, the largest economies in Europe, have collapsed, leading to the EU losing political leadership.

After winning last month's presidential election, Trump is preparing for a political transition in the USA, and the new "anti-elite" political influence is likely to increase significantly.

Meanwhile, the "axis of convenience" formed by Iran, North Korea, and Russia is attempting to challenge the Western-dominated international order.

Recent other developments—from the suddenly announced martial law by the now-impeached South Korean president (which was quickly overturned) to the downfall of Bashar al-Assad's regime in Syria—have deepened the impression that we are living in an era of extraordinary turmoil in geopolitical and domestic politics.

Last year's macroeconomic developments are also concerning. Countries are struggling to cope with low growth and huge budget deficits, and Europe's decline has deepened.

However, the stock market has remained relatively stable and has delivered high returns, including the S&P 500 Index recording nearly 60 all-time high closing prices.

The outstanding performance of the US economy is one of the important reasons for this. The US economy has not weakened as most economists expected, but has further led.

Given the amount of foreign capital that the USA is attracting, and its investment scale in future productivity, competitiveness, and growth drivers, the USA is likely to continue to outpace other major economies by 2025.

One of the consequences of this success is that the Federal Reserve did not smoothly lower interest rates to 1.75%-2% as the market expected a year ago. This trend is expected to continue: at the policy meeting in December, the Federal Reserve indicated it would reduce the frequency of rate cuts in 2025 and raise the terminal (long-term) rate.

However, the turmoil in national politics and geopolitics, along with the limited prospects for significant improvement, does pose risks to the durability of the USA's economic uniqueness. Even if the economic performance in the USA continues to exceed that of other countries as expected, the potential outcomes regarding growth and inflation have widened.

In fact, the global economy and policy outcomes as a whole now face greater possibilities, due to increased downside risks and also due to upside innovations—such as AI, life sciences, Food Safety, Medical Care, and defense—which could transform industries and accelerate productivity improvements.

In the absence of significant policy renewals, the baseline forecast for the USA includes: even if economic performance exceeds peers, recent growth rates are slightly lower, and inflation persists.

This will put the Federal Reserve in a difficult position: either accept inflation above target or attempt to reduce it, risking pushing the economy into recession.

Globally, economic differentiation will continue, prompting some countries to further diversify their Forex reserves away from the dollar and explore alternatives to Western payment systems. As a global benchmark, the yield on the USA's ten-year Treasury bonds will rise slightly, primarily trading in the range of 4.75%-5%. As for financial markets, they may find it more challenging to maintain their status as a 'good house' in a challenging geopolitical economic environment.

That is the situation now. However, in addition to recognizing the broader economic outcomes that may arise in 2025, it is also essential to regularly test the benchmarks used against actual developments.