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Sustainable investing

US, Asia to drive growth amid geopolitical uncertainty

December 18, 2024 - 5 min read

The economic and geopolitical uncertainty experienced in 2024 is expected to continue into 2025, according to Mirova’s Jens Peers, CFA® and Soliane Varlet. Here, they discuss trends and themes to be mindful of in the new year.

Key takeaways

  • The US and Asia are anticipated to be the primary drivers of economic growth, while Europe may lag
  • US interest rates are expected to rise, which tends to make the US dollar stronger
  • Companies ignoring sustainability issues could underperform

Economic and geopolitical instability were key elements in 2024 and are likely to remain so in 2025. The US and Asia are expected to be the primary engines of economic growth in the upcoming year.

“China is not standing still,” says Peers. “We expect more stimulus from the government to go into the local economy, which would be beneficial from infrastructure and commodity-related companies.”

India is expected to grow, too, especially in the context of friendshoring and nearshoring. Europe, on the other hand, is likely to lag, thanks to factors such as the manufacturing slowdown in Germany and political uncertainty in France.

In 2025, it’s believed interest rates in the US will rise and the US dollar will strengthen. “That puts the European companies in a much better perspective because they can actually sell at a lower euro and will also likely benefit from a more stable or potentially falling interest rate in the Eurozone as well,” says Peers.


Investment themes for 2025 and beyond

Several long-term themes are poised to shape the investment landscape. Key focus areas include artificial intelligence (AI) developments, renewable energy, and health and medical needs, with significant market opportunities in areas like GLP1 drugs for diabetes and obesity.

“With the advent of gen AI [generative AI], we are seeing a rise in energy demand, and this will lead to a rise in carbon emissions,” says Varlet. “Renewables are one of the key solutions for this increased need for power and increase need for decarbonization. New renewable capacity is also cheaper and faster to deploy than other sources like gas or nuclear.”

Investment ideas

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CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.

This material is provided for informational purposes only and should not be construed as investment advice. The analyses and opinions expressed represent the subjective views of the authors as of December 17, 2024, and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted. Actual results may vary.  This material is provided for informational purposes only and should not be construed as investment advice.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. Investors should fully understand the risks associated with any investment prior to investing.

This material is provided for informational purposes only and should not be construed as investment advice. References to specific securities or sectors is for informational purposes only and should not be construed as investment advice. There is no guarantee that any investment was or will be profitable.

Sustainable investing focuses on investments in companies that relate to certain sustainable development themes and demonstrate adherence to environmental, social and governance (ESG) practices; therefore, the universe of investments may be limited, and investors may not be able to take advantage of the same opportunities or market trends as investors that do not use such criteria. This could have a negative impact on an investor’s overall performance depending on whether such investments are in or out of favor.

Natixis Distribution, LLC is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.

Natixis Investment Managers includes all of the investment management and distribution entities affiliated with Natixis Distribution, LLC and Natixis Investment Managers International.

Mirova is operated in the US through Mirova US LLC. (Mirova US).

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