Economic Outlook: What Corporations Can Expect in 2025

The year ahead presents a promising business outlook. As the Federal Reserve continues to cut interest rates and the economy grows, companies may find new investment opportunities to facilitate expansion.

Still, 2025 will bring uncertainty, primarily from ongoing geopolitical conflicts and the changing U.S. administration. C-suite executives may approach capital spending cautiously, leaning toward stability. According to an October PwC Pulse Survey, only 38% of CEOs say their companies are pursuing significant risks.1

What can business leaders realistically expect in 2025?

Global growth will stabilize despite geopolitical instability.

Geopolitical tensions, such as the Russia-Ukraine and Middle East conflicts, could persist and widen in 2025, driving capital market volatility. Oil and agricultural markets are most vulnerable to the current conflicts.

“Even with geopolitical instability impacting certain industries, the overall U.S. economy has remained relatively stable and largely unaffected,” says Matthew McKee, director of Synovus middle market banking, in Atlanta. Likewise, the global gross domestic product (GDP) will rise to 3.3% in 2025 and remain stable through 2026.2 “Inflation has gradually declined across major economies and if this trend continues, it will bode well for global investments and capital spending in 2025,” says McKee.

However, there will still be significant uncertainties — which could disrupt supply chains and energy markets, potentially leading to inflation in affected economies — due to the ongoing political tensions.

The U.S. economy will grow, though at a slower pace.

Recent data from the Bureau of Economic Analysis reports the real gross domestic product (GDP) grew at an annual rate of 3.1% in the third quarter of 2024, with retail trade as the leading contributor to GDP.3 Current-dollar personal income also increased by 3.2% at an annual rate.

Meanwhile, inflation is still elevated but progressing toward the Federal Reserve's 2% target.4 Altogether, the country is heading into a strong year even with lingering challenges.

Economists have a positive, though cautious business outlook for 2025.

Deloitte’s Global Economics Research Center reports a positive initial response to the incoming administration and that they expect the new administration will continue building upon the economy's current strength.5 The team of economists offer insights on what 2025 might look like using different scenarios, suggesting their baseline version will be the most likely.

In the baseline scenario, researchers forecast that consumer spending will grow by 3.1% in 2025, slowing to 2.3% in 2026 due to declining population growth, government spending cuts and the inflationary impact of tariffs. The baseline model also projects real GDP growth of 2.4% in 2025, with a decline to 1.7% in 2026.

In a more positive scenario, the team predicts the Tax Cuts and Jobs Act will be extended, lowering the corporate tax rate to 15% for domestic manufacturers and sparking investment activity. In this scenario, the GDP will rise at an average annual rate of 2.7% between 2025 and 2029. This scenario also suggests strong consumer spending, fewer tariffs than anticipated and lower inflation.

The less positive scenario demonstrates what could happen if the new administration's policies are implemented in full, particularly if it imposes extensive tariffs. It forecasts the GDP falling to 1.6% in 2025 due to greater tariff implementation, a declining population and expanding inflation. However, the researchers believe this scenario is not likely.

Dealmakers expect booming mergers and acquisition activity in global markets

Amid global conflicts, deal volumes will skyrocket in 2025 and surpass $4 trillion, boosted by the president-elect's promises of corporate tax cuts and decreased regulation.6 As of December 2024, the total mergers and acquisition (M&A) value increased 15% from the previous year, totaling $3.45 trillion. The technology sector accounted for the largest share of M&A activity in 2024.

McKee says, “Leading dealmakers expect more lenient antitrust enforcement in 2025 and are also cautiously optimistic that the gap between buyer and seller expectations will continue to narrow, driving more deals to completion in 2025.”

Companies should be ready to enter new markets or pursue mergers and acquisitions that can diversify revenue streams and sustain growth. Still, it is important to note that experts warn tariffs could increase inflation, which would hinder M&A deals. “Expansion opportunities will be available. However, companies should carefully consider the risks of planned capital expenditures in specific markets and regions experiencing geopolitical challenges,” says McKee.

Technology, health care and energy will be the fastest growing sectors.

Companies interested in M&A opportunities or investing in high-growth markets may want to consider the technology, health care and energy sectors — the three fastest growing sectors offering the most favorable investment opportunities in 2025.7

IT spending will grow 9.3% in 2025 and total over $5 trillion worldwide.8 Companies will increase spending on servers — to accommodate the demand for Gen AI — and IT and software services.

Organizations might also invest in new data analytics technology to monitor consumer spending or enhance efficiency. So, stocks that capitalize on the expanding market or adopting modern technologies to remain competitive and increase operational efficiency are worth consideration.

Meanwhile, 71% of health care C-suite executives expect improved profitability in 2025 due to innovation and prioritizing growth strategies.9 This could be the right time to invest in health care stocks or merge with or acquire health care companies.

The energy sector will abound with investment opportunities in 2025. Global demand for electricity will rise by about 4% in 2025 to accommodate power needs for AI and increased industrial activities.10 In addition, the U.S. could become the leading producer of blue hydrogen, and investments could surge in this market in 2025.11

Strategic planning and adaptability empower companies to thrive amid uncertainty.

The corporate economic outlook for 2025 is positive but requires strategic planning. “Preparing a flexible strategy that helps to quickly adapt and respond to economic changes is critical,” says McKee. “For example, with scenario planning, companies can assess potential impacts like market-specific tariffs and mitigate any associated risks.”

Synovus offers tools to help corporations evaluate growth opportunities, as well as tailored commercial banking solutions to meet even the most complex financial needs. To learn more about how we can help your organization achieve its vision for the future,  contact a Synovus Commercial Banker for assistance or stop by one of our local branches for more details.