The Year Ahead: Out of the frying pan
Ten wildcard scenarios for a cracking 2025.
As seasonal as hangovers and resolutions – and often as short-lived – early January sees many geopolitical forecasts for the 12 months ahead. Like last January, we can’t let the tradition go unspoken. But rather than add to the growing list of already-stale predictions, we want to throw a few wildcards onto the table: the low-probability but high-impact events that businesses and investors should watch out for in 2025.
Before laying these out, it’s worth examining how last year’s batch of wildcards fared. The year 2024 was full of unexpected surprises, and 2025 looks to be no different. Still, there were some common themes, many of which we anticipated in our daily dispatches. And those dispatches will return for our subscribers on 13 January, with our first weekly outlook for GD Pro subscribers on 11 January. That report, like today’s, will be a little longer than usual, as it will cover the period from our last edition of Week Signals in December. And much like the past year, it hasn’t been a quiet period either.
So how did our ten wildcards from last year go?
1. A coup d’état in Venezuela
Obviously, this didn’t happen, but between a disputed election, threats to invade Guyana, and widespread protests, the conditions came close. In the end, Venezuela’s defence minister swore allegiance to Nicolas Maduro and his discredited regime, allowing it to limp on. Further, mindful of high migration and oil prices, Washington placed minimal pressure on Caracas. This could all change in 2025 – particularly with a hawkish and Latin America-focussed State Department under Marco Rubio – but for now, Maduro remains in charge, and the army, when not clearing the streets, remains in its barracks.
2. A major war between Ethiopia and Somalia
This also came close – and indeed there were skirmishes throughout the year – but a December peace deal brokered by Ankara appears to have contained the dispute between Mogadishu and Addis Ababa. Somaliland, a renegade Somali province that Ethiopia said it might recognise in exchange for maritime access, continues to assert its independence. Other provinces, from Jubaland in the south to Puntland in the north, also threaten to break away. But for now, there’s little appetite for a new war over Somalia’s fragmenting regions, particularly with Ethiopia’s economic recovery halting and stability across its northern borders uncertain.
3. A third-party candidate “spoils” or even wins the US election
This arguably did happen, when Robert F Kennedy Jr ended his presidential bid to support Donald Trump, bringing a coalition of once disengaged and disaffected voters with him. Like the supporters of other ex-Democrats who’ve joined Trump, like Tulsi Gabbard, Kennedy represents an overlooked but demographically consequential cohort – what our friends at polling firm Cygnal describe as “young, ticked-off, and working class” – which we wrote about in April. But these voters, who traditionally distrust and disagree with the political mainstream – whether it’s the Republican MAGA class or Democratic managerial class – threaten not only to spoil the 2024 election but the 2025 administration. Already, fights are breaking out over H-1B visas, foreign policy and government spending. Trump’s broadened coalition was a blessing in being elected but could become a curse in office.
4. The AI bubble bursts
This definitely didn’t happen, though there is a growing recognition that many artificial intelligence start-ups, particularly in the large language model space, are built on hype, or at least promises the underlying technology is unable to yet deliver. Many analysts who made similar predictions for 2024 are changing their forecast to 2025. We don’t necessarily think the AI bubble, if indeed one exists, will burst this year. That said, we remain cautious on many of the claims around this otherwise transformational technology.
5. The end of theocracy in Iran
This didn’t happen, but we are closer to its realisation than a year ago. After seeing its proxies in Hamas and Hezbollah degraded, and following the fall of the Assad regime in Syria, Tehran’s axis of resistance is a shadow of its former self. Domestically, this has diminished the prestige of the theocracy and its praetorian guard, the IRGC. The election of a relatively moderate president in Masoud Pezeshkian, following the death of his predecessor in a May helicopter crash, has also brought a new, less theocratic order closer, whether it can be described as democratic or not.
6. Maritime trade routes could suddenly be redrawn
This happened, but was less sudden than gradual, judging from the many vessels that continued to risk the Red Sea passage throughout 2024. With Yemen’s Houthi forces now under increased pressure from Israel following the destruction of Hamas and Hezbollah, how long their grip lasts on this important route remains to be seen. In turn, this could determine whether alternative trade routes, whether overland or via waters like the Arctic, remain strategically necessary and economically competitive.
7. A China rebound
Depending on which analyst you speak to, it was either a good or a bad year for China’s economy. GDP growth was 5% as planned, at least according to official estimates, but share market performance was better. China’s SSE Composite Index trailed America’s S&P500 over the year, rising 12% versus 24%, but from lows in September, it's up 28% versus 6%. China’s economy may not be expanding at 10% per year anymore, but it’s still a global growth engine, source of innovation, and far from collapse.
8. Tense civilian-military relations in Mexico
This may yet happen, but for now, President Claudia Sheinbaum continues to privilege the military’s outsized role in the state, as it enjoyed under her predecessor Andres Manuel Lopez Obrador. Sheinbaum’s challenge in 2025, more than in 2024, will be in balancing the interests of this powerful internal stakeholder with external coercion from an increasingly demanding United States. The Trump administration, in seeking to apply pressure on the border, drugs, or the USMCA trade agreement, could demand reforms that directly or indirectly diminish the Mexican military’s political and economic power. How the military reacts, rather than the voting public, could be the biggest constraint on Sheinbaum’s decision-making, at least in the first year of her term.
9. Modi loses the Indian election
Modi’s Bharatiya Janata Party came first in India's national election but lost its majority. We posited the opposition could achieve such a result if it replaced Indian National Congress scion Rahul Gandhi, but this ultimately wasn't necessary, with the great-grandson of Jawaharlal Nehru finding his feet, literally and metaphorically, on a series of yatras, or cross-country journeys. Gandhi’s yatras, like those of his namesake, highlighted a growing public fatigue with religious nationalism, including in the Hindu-dominated north, where voters were ultimately found to be more concerned with economic performance, rural welfare, and jobs. Modi remains popular, but the BJP’s domination of modern Indian politics, particularly once the prime minister goes, is no longer a given.
10. Technology will have no bearing on politics
This wildcard was largely tongue-in-cheek, but we wanted to stress how the role of social media, online disinformation and AI had been overstated in electoral punditry. We stand by this view. Several of the year’s surprise results – from France to Romania to Georgia to the US – have been blamed on algorithms and bots, but a more introspective analysis suggests the bigger determinant of political longevity has (as always) been the ability to listen to people and take their bread-and-butter issues seriously. If there was one mistake made by the losing incumbents of 2024, it was taking their publics for granted. With such an attitude, you hardly needed a Russian troll factory, or Elon Musk’s X, to lose an election.
Now to our wildcards for 2025.