John Denslinger’s view of 2025 mixes fluctuating GDP, economic uncertainty, technological pathways to organic growth and semiconductors on a roll.
Do you remember forecasting this time last year? Inflation dominated nightly news. The Fed signaled successive near-term rate increases. Reshored supply chains were still new and somewhat untested. Jobs openings were plentiful but many went unfilled. Would it be recession or soft-landing? Fortunately, consumer spending saved the day. A combination of strong consumer spending with massive Federal stimuli set the stage for a year end 2.5 per cent GDP. 2024 will go down as another good year for business!
As for 2025, the International Monetary Fund forecasts modest growth in the global economy at 3.3 per cent. That figure is up slightly from 2024’s outlook of 3.2 per cent. As for the US, IMF projects 2025 GDP at 2.0 per cent, down significantly from the 2024 outlook of 2.6 per cent. Other sources, such as University of Michigan, Morningstar, Deloitte and The Conference Board, also project similar declines in GDP echoing economic deceleration. Each sees a slow first half with quarter-by-quarter resurgence in the second half and beyond.
Every forecast year comes with unknowns. The unknown in 2025 is economic uncertainty. Growth seems more than likely but requires a timely easing of inflationary pressure that encourages robust business investment and continued consumer spending. No-growth is also conceivable. All it takes is ill-timed monetary action, depleted household savings, pull-back in consumer spending, geo-political conflicts, supply line disruptions, protectionist trade policy shifts, big tech layoffs and/or curtailed government stimuli. These are not normal times!
With the right technology, there are several promising opportunities offering real organic growth in 2025:
Digital economy—AI data centers tops the list, but look for additional 5G build-outs, advanced communications satellites for ubiquitous Wi-Fi and cellular coverage, and semiconductor manufacturing systems.
Green energy and sustainability—EV, battery and charging infrastructure tops this list with electrification of America a close second. Solar and wind will continue to grow. Don’t overlook early system design-ins for small modular reactors (SMRs). There are at least a half dozen innovative technologies in play.
Healthcare and life sciences—AI applications in diagnostics, treatment and patient care stand out. AI assisted robotic and telemedicine systems are solid growth areas as well. Also, 3D printing of patient specific implants for knees, spines, skulls and hips has gone mainstream. The technology needs manufacturing systems for customized prosthetics and orthotics.
Reshoring—the shift of manufacturing stateside continues. State-of-the-art manufacturing includes robotics, industrial IoT and connectivity that meshes seamlessly with upstream suppliers and downstream customers.
E-commerce and logistics—it’s all about more robotics and IoT that contribute to lower cost and faster processing.
Semiconductors is the big bright spot. It is the one sure market poised for a second consecutive year of double-digit growth. For the Americas, WSTS projected a 25.1 per cent year-on-year increase for 2024 and 14.8 per cent in 2025 (Source: Spring 2024 Revised). Cap/Ex will also increase. Semiconductor Intelligence estimates an 11 per cent increase in Cap/Ex spending in 2025 thanks to: (1) a strong demand for more powerful, cutting-edge semiconductors, and (2) a CHIPS Act distributing billions in grants and loans across the entire semiconductor supply chain bolstering localized manufacturing and research.
So, there you have it. GDP will contract in the first half of 2025 but gain strength in the second. Economic uncertainty presents a downside risk. The right technology can be a pathway to organic growth. Semiconductors are on a roll. It seems reasonable to forecast 2025 with cautious optimism.