Janus is a uniquely Roman god that did not have any Greek equivalent. Janus was the god of beginnings and ends, entrances and exits, change and transition, gateways, doorways, and archways. He was famous for having two faces one looking back and one looking forward.
Our colleagues emulated the spirit of Janus to look back at the most important events and changes in their respective regions in 2024, and take a glance at the crystal ball for 2025, to share their opinion about the most important or impactful changes likely to happen this year.
UAE
As an oasis of political stability, a bustling economy, and a cultural melting pot, the UAE continues to attract high-calibre expatriates pursuing the “UAE Dream” and further fuelling the nation’s economic growth and diversity.
GDP is projected to have grown by 4%, largely driven by non-oil sectors such as Trade (which is the largest contributor to non-oil GDP), Financial and Insurance Services, as well as construction and real estate. 2024 was a record year for tourism and associated services were, which showed unprecedented growth.
These strong fundamentals reflected on our data at Recovery Advisers with increased settlement and recovery ratios being seen; particularly for many old “lingering” claims.
Without question, 2024 solidified the UAE’s position as a strong commercial hub, and expatriates’-magnet.
Egypt
Egypt implemented a significant currency devaluation in March 2024, a critical step in addressing the persistent foreign exchange shortage. While this devaluation was necessary to align the Egyptian pound with market forces and meet IMF requirements, it exacerbated inflationary pressures, particularly on imported goods, further straining household budgets.
Following the devaluation, Egyptian banks have successfully transferred a large volume of outstanding dues to international suppliers. This move has improved trade relations and supply chain stability but has also intensified the pressure on Egypt’s foreign reserves, highlighting the delicate balance between meeting external obligations and maintaining liquidity.
The Egyptian pound is expected to face further devaluation in 2025 as the government pivots toward liberalizing its exchange rate system. While this could attract international investors in the long term, short-term inflationary pressures are likely to escalate, leading to further cost-of-living challenges. However, increased tourism and potential energy exports could offset some financial stress.
Other MENA countries
The disparity among the sub-regions of the Middle East and North Africa continues to grow. On one hand, the GCC is experiencing remarkable economic growth and solid fundamentals, largely driven by diversified economic activity fueled by private spending and investment.
In contrast, political instability in the Levant and economic fragility in North Africa leave little room for optimism. Political stabilization is expected to remain a top priority for policymakers in the region and beyond, influencing economic strategies ranging from bailouts, aid, and development packages, to guiding monetary policies and interest rates.
The announced economic policies of the United States will have mixed results on the region. A stronger USD is expected to result from the United States’ tariff plans, which will exert pressure on North African currencies, particularly the Egyptian pound.
Yet the GCC is likely to benefit from the same bundle of economic policies—such as reduced interest rates and the revitalization of energy markets.
There is rarely a dull day in the Middle East and North Africa, and 2025 is shaping up to be no exception.
East Africa
In 2024, East Africa’s trade landscape experienced significant developments. The African Continental Free Trade Agreement (AfCFTA), which aims to boost intra-African trade by reducing tariffs on 97% of goods, played a pivotal role in enhancing trade in the East Africa region. The AfCFTA is expected to increase East Africa’s trade volume by approximately 40% in 2025.
Kenya strengthened its trade relations with the United Arab Emirates (UAE) in 2024. The UAE emerged as Kenya’s sixth-largest export market and second-largest import source in 2024. The trade relations between Kenya and the UAE are expected to strengthen even further in 2025 since the two countries signed a bilateral agreement at the beginning of the year. Additionally, the Economic Partnership Agreement (EPA) between Kenya and the European Union, came into force. The EPA facilitates duty-free, quota-free access to the EU market for all Kenyan exports, except arms. This has in turn opened up Kenya’s market to EU imports and is expected to promote trade between Kenya and Europe.
In 2025, East Africa is set for further economic growth. The World Trade Organization (WTO) forecasts a 3.7% rise in export trade. The World Bank also projects Sub-Saharan Africa’s economy to grow by 4.5%, supported by stabilizing commodity prices and reduced import bills.
South Africa
In 2024, South Africa experienced a significant political transformation with the establishment of a coalition government, bringing renewed optimism for economic reforms and fiscal stability. The political steadiness is especially significant when compared to neighbouring countries like Botswana and Zimbabwe, which faced hurdles in maintaining steady governance. South Africa, alongside Angola and the Democratic Republic of Congo (DRC), made notable progress in diversifying their economies and enhancing infrastructure. South Africa spearheaded renewable energy projects to decrease dependency on coal, Angola experienced GDP growth fuelled by increased oil production, and the DRC executed structural reforms to attract foreign investments.
Looking ahead to 2025, there is a sense of confidence regarding improved trade and integration through initiatives like the African Continental Free Trade Area (AfCFTA). Enhancements in trade facilitation are anticipated to boost intra-regional commerce, particularly in agriculture, mining, and manufacturing. For South Africa, Angola and the DRC, this implies greater market access and economic expansion. However, economic disparities among member nations could pose challenges to balanced growth, necessitating cooperative policies to tackle these differences and ensure equitable development.
Debt management will remain crucial in 2025, with high borrowing costs and strong US dollar putting pressure on national budgets. Policymakers are expected to focus on debt restructuring and fiscal reforms to prevent economic instability. Additionally, global shifts in monetary policy and reduced demand for key exports could strain foreign currency reserves. Innovative strategies, such as bilateral agreements and concessional financing, will be vital for maintaining economic stability and growth.
China
China is a large and structurally complex economy, and when summarizing its economic situation in 2024, we can always see both sides of the coin.
Although it has clearly slowed in recent years, China’s GDP, driven by export growth and policy stimulus, still grew by 5% to 13.49 trillion yuan in 2024.
On the export front, China continues to face pressure from Sino-US trade friction and global trade barriers, but according to data from Chinese Customs, China’s total import and export value in 2024 reached a new high of 43.85 trillion yuan, up 5% year-on-year.
However, consumption has remained weak, which is why the Chinese government introduced a large number of policies to stimulate domestic demand in the fourth quarter of 2024. In the short term, policy stimulus has boosted consumer willingness, but in the long run, it is still necessary to explore new drivers to stimulate domestic demand.
In terms of investment, the real estate market continued to decline, forcing the government to constantly introduce “stabilizing” policies. In an environment of insufficient domestic demand and a weak real estate market, companies going abroad became a hot topic in 2024, with the Middle East, Africa, and Southeast Asia becoming hotspots for Chinese companies. In 2024, China’s total outward foreign direct investment reached USD 124.4 billion, a 9% increase year-on-year.
In summary, the issue of unbalanced economic development in China remains severe. While exports are strong, domestic demand remains weak. The arrival of a “Trump 2.0” era is expected to bring greater pressure on China’s exports in the new round of Sino-US trade friction. China’s economy will face even more complex challenges in 2025.
Europe
The European theatre has been really active in 2024, with renewed leadership at the EU institutions’ helm, but struggling governments in major economies (France, Germany and Austria), while European exporters benefited from decreasing inflation and interest rates. The war and political violence at the Eastern and Southeastern borders of Europe continue to have a major impact on the economy, especially on energy security. This has been adversely affecting the manufacturing sector primarily and prompted an influx of investments in the defence sector.
Thanks to the new EU-Mercosur free trade agreement and the stabilising Southern American markets, we expect a strong growth of European export into the region in 2025. However, Brazil and Argentina are still not past the turning point, we’ll see if their fiscal/economic policies will continue to be sustainable.
With the new US government starting from late January 2025 and the bold promise of the new president to end the war in Europe in one day, we hope that the Ukraine war will actually end with a peaceful resolution by the end of 2025.
UK
Looking back at 2024, news in the UK was dominated by Labour’s landslide victory and huge majority in July’s General Election – followed shortly thereafter by speculation about the new Government’s first budget.
The wave of election victory euphoria was soon quashed by Labour’s gloomy view of the situation inherited from 14 years of a Tory government. Ahead of the budget, businesses and consumers took a cautious wait and see approach and negative GDP figures for September and October left the UK on the cusp of recession as the end of 2024 approached. The budget delivered a hammer blow for many businesses, particularly SMEs, who were faced with increased Employer National Insurance and minimum wage payments in a year which has seen interest rates peak at a 16 year high of 5.25%.
As we enter 2025, the cost of borrowing has eased but the Bank of England has said it will be taking a “gradual approach” to cutting rates further. Inflation rates, which had decreased to reach the Government’s target rate of 2% in May 2024, had a worrying uptick again towards the end of last year. The concern is that upward trend will continue into 2025 as businesses faced with higher tax and wage burdens start to pass on additional costs to buyers and consumers.
From a trade perspective, a key question is whether the UK can hold on to its position at the world’s 4th largest exporter (up from 6th in 2023). With the US being the UK’s largest single export market (accounting for 22.1% of all exports for the year to end 2024), all eyes will be on President Trump and to what extent he will follow through on his election promise to hike import tariffs.
The great hope has long been that a full trade agreement with the US (rather than the handful of MoUs agreed with individual States) can be reached. Given the rhetoric from the Trump camp those hopes must be rapidly diminishing, with the President’s new “right-hand man”, Elon Musk, kicking off 2025 with attacks on Prime Minister Sir Keir Starmer and the UK Government.
In the meantime, the UK continues to push forward with other new post-Brexit trade deals, with the CPTPP becoming operational at the end of 2024 and an agreement with the GCC trading bloc nearing fruition. But will these deals generate enough additional trade to soften the blow of higher US import tariffs? Watch this space.
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