What does 2025 hold for businesses

Familiar themes will continue to shape the global business environment in 2025: unresolved geopolitical conflicts, amplified trade tensions under the second Trump administration, and technological advances, among others. The wide-ranging nature of these trends means companies will have to consider a variety of strategies to mitigate their potential effects, while staying attuned to new opportunities.

We talk to a host of ANZ experts on what companies can expect in 2025 and how they can navigate this evolving landscape, in terms of geopolitics, trade and supply chains, the macroeconomy, payments and technology.

Geopolitics, trade, and supply chains

Current geopolitical issues will likely persist

The conflicts and geopolitical competition that beset the world in 2024 will likely remain largely unresolved in 2025, says Cameron Mitchell, Head of Geopolitical Risk, at ANZ. He characterises these issues using the mnemonic CLEAR:

• Cascading events such as the ongoing Ukraine conflict and US–China tensions that could test the resilience of the international system as they occur simultaneously.
• An increasingly leaderless global order with older institutions challenged by a growing number of countries that feel they no longer serve their interests.
• Some conflicts and animosities between countries will have an enduring nature with little chance of being clearly resolved in the near term.
• Occasional asymmetric shocks like the collapse of the Assad regime in Syria in late 2024 that could catch out world leaders and markets alike.
• The resilience of the international system is likely to continue to provide some geopolitical buffers, but it will also be tested by waning commitments to the multilateral institutions that created the resilience in the international system in the first place.

Given the fluidity of global events, businesses may be better off focusing on the most concrete trends, risk management strategies and collaboration, rather than predicting outcomes or picking winners or losers.

“If you're doing your due diligence and looking at the indicators and warnings for some of these geopolitical tensions or relationships, and you’re asking, are they getting worse? Are they deteriorating? If they are, well, then let's take a look at your risk management process, your exposures, and so on. ANZ does a lot of this work, so potentially, this is an area where there is an opportunity for collaboration with certain customers to compare notes on issues,” says Mitchell.

Trade turbulence expected ahead

The Trump administration’s use of tariffs as a lever to extract concessions from trading partners is top of mind for global supply chains.

Richard Yetsenga, Group Chief Economist at ANZ, expects economic disruption rather than destruction as the Trump administration moves on tariffs. “Unless Trump can quickly free up substantial resources in the US economy, imposing tariffs on the three largest trading partners is going to result in much higher prices for US consumers, weaken the US economy and increase inflation. Much narrower tariffs are thus more likely” he explains.

 “A high proportion of Chinese production is exported, and surplus export-promoting economies are likely to be most at risk, in an environment in which particularly deficit economies are keen to try and rebuild domestic capability.”

For Australia and New Zealand, a more measured and targeted US approach to trade and the domestic economy could mean consumers may benefit from cheaper imports while maintaining export linkages with the world’s largest economy.

Lisa Vasic, Managing Director, Transaction Banking at ANZ expects institutional clients to focus more on ensuring resiliency of their supply chains and managing the dynamic that results from the uncertainty, particularly around the potential tariff structures across key markets in the Asia–Pacific region. “I think you'll find that there's a lot of agility and resilience on the back of Covid-19 disruptions that I think will put them in good stead to be able to navigate some of the uncertainty that will come up over the next 12 to 18 months,” she says.

‘Friendshoring’ and ‘nearshoring’ trends are here to stay

With the prospect of escalating trade restrictions, the ‘friendshoring’ and ‘nearshoring’ phenomena that resulted from logistical disruptions during the Covid-19 pandemic will become even more entrenched, extending from the manufacturing of retail-variety items to high-value and sensitive commodities such as semiconductors, critical minerals, and defence items.

“I think ‘friendshoring’ is a phenomenon that is going to continue, particularly in areas like critical minerals mining and production. That’s something that sits very squarely in the bracket of economic security. And I think there's an understanding across a number of countries that are trying to diversify their critical minerals supply chain that they can't go it alone,” says Mitchell.

Australia has some of the largest critical mineral deposits on the planet, including high-quality cobalt, lithium, manganese, and rare earth elements.

Economy

Inflation is likely to stabilise; rates to normalise

Inflation is expected to remain steady in the next few months, says Yetsenga – and central banks will adjust interest rates accordingly.

“We've seen the beginning of a quite desynchronised easing cycle, but it is a global easing cycle nevertheless. I think countries that have delivered easing are likely to slow down the pace of easing over the course of 2025 as that stickiness of inflation comes through in many ways,” Yetsenga says. “This is a mid-cycle slowdown. It's not a global recession and certainly not a global boom either. In mid-cycle slowdowns, things do tend to be quite decorrelated.”

He expects the Federal Reserve to slow down the pace of rate cuts this year. “We only expect three 25 basis point rate cuts over calendar 2025. The Fed delivered nearly that much easing in the closing four months of 2024 and that reflects the fact that US activity is still strong, and while inflation is declining, the risk of inflation under-shooting the Fed's target seems very low. That also sets the tone for other central banks. We expect to see some easing across both advanced economies and emerging economies, but that easing is likely to be modest and sporadic,” he says.

De-dollarisation impulses are real, but not likely to grow stronger soon

Signs of payment diversification away from the US dollar have been evident in some sectors such as commodities for some time. Various multinational projects to issue central bank digital currencies (CBDCs) that do not rely on the dollar have further put into question the currency’s long-time dominance. However, Yetsenga thinks the de-dollarisation trend will be a slow burn, rather than a big bang.

“I don’t think it will be a feature of 2025 in a way that distinguishes it from 2024. There are some slow underlying trends, but they're more like drips from a tap than anything forceful and abrupt. Of course, for the stability of the international monetary system, I continue to hope the shift away from the dollar is this slow and consistent, rather than something which comes on with a rush,” he says.

India’s star shines bright

Across Asia Pacific, India’s economy is expected to remain a strong performer in 2025. The Reserve Bank of India expects the economy to grow 6.6% in fiscal year 2024–2025,^disclaimer making India one of the fastest-growing economies in the world.

“I’m still bullish about India,” says Yetsenga. “India's economic destiny is in its own hands, and policy needs to do some heavy lifting for India to validate the constructive outlook which I have.”

He notes that India is still at a relatively early stage in its economic transformation and continues to iron out issues over transparency and institutional fragilities, which suggest that it has a long runway for growth.

Payments and technology

Real-time payments increasingly become the norm

As real-time payments gain critical mass in Australia, Asia, and elsewhere, Vasic says a big theme for institutional clients this year will be getting their operations real-time ready.

ANZ was the first major bank to launch PayTo service for billers and Vasic expects more and more companies to use the platform to improve operational efficiency, enhance customer service, and better manage their cash flow.

“Real-time payment capability is really the first step toward real-time treasury and new digital customer propositions,” she says. “What this means for our customers, with the advent of generative AI, is to be able to have real-time data, make real-time payments, and generate real-time insights. For some customers, real-time can actually mean in their time. It’s about the infrastructure being able to provision those services in a way that customers can access at the right time for their business and for the right scenario. This transition and build of real-time capability is critical given the retirement of the direct entry system and cheques by the end of this decade.”

In December 2024, ANZ stepped up their offering with the launch of ANZ Express Payments, connecting the SWIFT network with the domestic, real-time payments network, making it faster for account holders in Australia to receive money from overseas.

When implementing real-time payments, companies and the banking industry face the challenge of balancing advancing technology, customer protection, and cost efficiency.

“What is the right amount of friction we can introduce in the real-time economy to stop fraud and scams? AI can help in that conversation where you don't need to introduce a huge amount of friction because AI can ingest, analyse, and come up with predictions on potentially fraudulent-looking or scam transactions,” says Hari Janakiraman, Head of Industry and Innovation, Transaction Banking at ANZ. “So, it's an opportunity for our customers to explore the ways that ANZ can partner with them, and how we can use our expertise to co-create some of those solutions with our customers,” he adds.

While real–time payments have grown significantly in recent years, some markets may not necessarily be set yet for real–time payments, due to lack of infrastructure and regulation. New Zealand, for example, operates a hybrid system.

“New Zealand is a different market with different maturity in infrastructure. What New Zealand is doing through a combination of seven-day payments and open banking is providing similar services to what we have here in Australia. They've been delivered a little bit differently because of the market nuances,” explains Vasic.

Despite the variances in the speed of implementation, the industry, by and large, is moving toward giving customers broader options.

“Working through elements like PayTo is really important because what we want to do is make sure customers have choice around their payment curation and payment execution,” says Vasic.

AI implementation intensifies

ANZ experts expect to see more AI-driven services and products going live this year in areas such as fraud protection, customer service enhancements, and optimal payment routing.

Jackie Kallman, Head of Payments Industry and Engagement, ANZ, expects the industry to move toward greater customisation in the customer experience using more powerful technology. “In many ways, it’s back to the days when everything was customised on an individual level, because experiences were relationship-based. Now we have technology that can synthesise distributed and complex information to draw similar kinds of conclusions in a digital world,” she says.

Greater digitalisation, however, presents new challenges to the security infrastructure, putting the spotlight on resiliency and safety.

“There are two elements to this: firstly, we can use AI to help identify fraudulent transactions. The second one is the educational element, which remains critical and something that we work very closely with our customers to strengthen that first line of defence, which is often people in their treasury or payments processing centres who have the visibility over any changes in the risk profile. We know cyber criminals are getting more complex and clever in the typologies that they use to enact fraud, and so what we've got to do is make sure that we continue to provide information to our customers around those typologies, but also uplift our systems for detection,” explains Vasic.

Given the cost of AI technology onboarding, companies will also need to find the right balance on what they can realistically build themselves and what they can outsource to a partner. “We see that conversation happening within the financial services industry, but also among our corporate customers. What is the best way to partner? How do we partner? And how do we get the best of both worlds?” says Janakiraman.

He adds that with the increased use of AI, companies will also need to be more mindful of data quality, data capture and storage to improve the effectiveness of their models. “If you have to take advantage of AI, you need to have really good data, so that has to be a focus,” he says. 

Use of digital assets and digital currencies gains momentum

Corporate treasuries are expected to increasingly look at or adopt digital assets such as stable coins or tokenised bonds, as part of their portfolios. “If you are a corporate treasurer and your job is to ensure that your company's liquidity is maximised, and also to maximise return on any assets you have, the interesting point is whether digital assets should be part of your mix,” says Janakiraman.

Others may also move toward accepting digital assets as payments in various transactions. “We have seen some large payment-focused companies establish their own networks, which are powered by blockchain technology to move money 24/7 using the existing financial market infrastructure, and they see that as a better way for them to manage their own money,” adds Janakiraman.

On the wholesale level, progress on developing digital currencies varies across the region. Thailand, the UAE, Hong Kong, China, and Saudi Arabia have partnered with the Bank for International Settlements to develop Project mBridge, a multi-central bank digital currency (CBDC) platform to enable cross-border payments and settlements. Meanwhile, Hong Kong has advanced pilot programmes for an e-Hong Kong dollar and tokenised deposits, while Australia is considering the merits of a wholesale CBDC.

Regulation on digital assets is also evolving. In Australia, the securities regulator, ASIC, issued a consultation paper in December 2024 to expand its oversight on cryptocurrencies and digital assets to better protect investors and users. And the Reserve Bank of Australia, through Project Acacia, is exploring the potential role of a central bank digital currency in supporting wholesale asset tokenisation.

“We’ve definitely moved from the hype to solving real problems. There's still the question around how the regulation will work when there are different features involved in this technology. We could argue that it's just another technology for payments or that it performs the same function – this is true to an extent but the technology also introduces new elements,” says Kallman. “So how will the regulation adapt to ensure that the current protections still exist?”