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Amid the ongoing geopolitical tension, the <keyword id="19904988" type="General" weightage="20" keywordseo="energy-sector" source="keywords">energy sector</keyword> will continue to face challenge while the <keyword id="20468174" type="General" weightage="20" keywordseo="consumer-goods" source="keywords">consumer goods</keyword>, automotive, healthcare is set to expand in 2025, highlighted a report 'Industry Outlook 2025' by <keyword id="20618515" type="General" weightage="100" keywordseo="Economist-Intelligence-Unit" source="keywords" meta.keywordsubtype="org" meta.entityname="Economist Intelligence Unit" meta.hostid="261" meta.entityid="Economist Intelligence Unit">Economist Intelligence Unit</keyword>. The report noted that the Fossil fuel markets will continue to face risks from geopolitical conflicts, particularly in the Middle East and Ukraine. However, investments in <keyword id="19895602" type="General" weightage="20" keywordseo="renewable-energy" source="keywords">renewable energy</keyword> will remain strong, especially in China, as the world pushes toward cleaner and more sustainable energy sources. The report said "Fossil-fuel markets will continue to face <keyword id="20064250" type="General" weightage="20" keywordseo="geopolitical-risks" source="keywords">geopolitical risks</keyword> amid conflicts in the Middle East and Ukraine, but investment into renewables will remain strong, particularly in China." It also added that the financial sector faces a mixed outlook with falling interest rates anticipated to narrow bank profit margins, potentially leading to smaller dividend payouts for shareholders. Yet, regulatory easing could provide relief, with the Basel III endgame likely seeing further delays, softening the impact on banking institutions amid a challenging economic landscape. For the consumer goods and retailing the report added that the Global retail volumes are forecast to grow by 2.2 per cent in 2025, thanks to easing inflation. However, stricter regulations on online retailing will target high-volume, low-price retailers, to ensure fair competition and consumer protection. It said "Global retail volumes will expand by 2.2 per cent, helped by disinflation, but regulations around online retailing will tighten further" As per report, the <keyword id="20359760" type="General" weightage="20" keywordseo="automotive-sector" source="keywords">automotive sector</keyword> is set for a record year, it said "After a difficult few years, annual new-vehicle sales will reach a record 97.2m units in 2025. This includes a 2 per cent rise in new car sales, a 4 per cent increase in commercial vehicle sales, and a significant 16 per cent growth in <keyword id="19963112" type="General" weightage="20" keywordseo="electric-vehicle-sales" source="keywords">electric vehicle sales</keyword>, reflecting the sector's recovery and the shift toward cleaner mobility. In technology the report added more countries will adopt satellite internet, although the primary users will be enterprise clients, including military and maritime sectors. Amazon's Project Kuiper will challenge the existing market dominance of Starlink and EutelSat OneWeb, offering more competition and potential growth in satellite connectivity. The resulting tensions will continue to affect investment into production and market entry, with companies taking advantage of government incentives to build out more flexible supply chains. <keyword id="23684177" type="General" weightage="20" keywordseo="investment-in-technology" source="keywords">Investment in technology</keyword>, particularly artificial intelligence (AI), will also be strong as projects gather pace. However, technology companies will face pressure from several directions as regulations tighten (particularly in Europe), investors become more impatient for profits and their energy usage comes under more scrutiny.

Consumer goods, auto and healthcare sector to expand but energy may face challenge in 2025: Report

<ul class="summary-list"><li>Russia almost tripled its defense spending to finance its invasion of Ukraine.</li><li>Defense firms are busy — but high inflation and interest rates past 20% have left them struggling.</li></ul>In Russia's defense sector, demand is surging — but its companies are struggling all the same.The Kremlin is seeking ever more weapons for its attack on Ukraine.But sky-high interest rates are leaving companies struggling to turn a profit, a prominent CEO recently said.Sergei Chemezov, CEO of the defense conglomerate Rostec, sounded the alarm in an address to Russian senators in late October.He <a target="_blank" class="" href="https://www.rbc.ru/economics/23/10/2024/6718c36a9a79476b774f1989">said</a> "record" interest rates were "eating up" the profit from its orders.<h2 id="f760578d-7185-4150-bf09-fde6f3d70c06">Debt trap</h2>He said clients tended to pay 30%-40% of an order's value in advance, leaving the firm to borrow the rest.That debt, he said, was so expensive that it canceled out any profit on the work."If we continue to work like this, then most of our enterprises will go bankrupt," he said.A few days after he spoke, Russia's central bank <a target="_blank" class="" href="https://www.businessinsider.com/russian-central-bank-raises-key-interest-rate-to-21-2024-10">hiked its main interest rate further still</a>, from 19% to 21%.Rostec is not alone in its predicament, economic analysts told Business Insider.Rising interest rates and export bans were eroding Russian defense companies' profits across the board, they said, making the Russian state the only guarantor of revenues.<h2 id="b9ad0c28-486e-4588-b4c2-4b027ca1e40d">Sustaining the war machine</h2>Since launching a full-scale invasion of Ukraine about two and a half years ago, the Kremlin has taken a slew of measures to keep its defense sector pumping out tanks, ammunition, drones, and missiles.It restructured its economy to prioritize the war, imposed export bans, tapped its national wealth fund, and strengthened trade with non-Western countries.Its defense budget soared, from $59 billion in 2022 to $109 billion in 2023.It's heading for an <a target="_blank" class="" href="https://www.sipri.org/media/newsletter/2023-december">estimated $140 billion</a> in 2024, with a draft budget forecasting $145 billion for 2025.That figure would represent 6.3% of Russian GDP, the highest share since Soviet times.That spending has consequences, said Roman Sheremeta, an associate professor of economics at the Weatherhead School of Management at Case Western Reserve University."The government pumped enormous sums of money to support the war efforts," he told Business Insider. "And the Russian reserves have been almost depleted."The liquid assets of Russia's national wealth fund dropped by almost half, from 8.9 trillion rubles (about $91 billion) before the war to 5 trillion rubles (about $51 billion) at the end of last year, Bloomberg <a target="_blank" class="" href="https://www.bloomberg.com/news/articles/2024-01-17/war-in-ukraine-drains-nearly-half-of-accessible-russian-reserves">reported</a> in January, citing Finance Ministry data."The Kremlin cannot afford defense companies to go bankrupt," Sheremeta said.<h2 id="86664911-b4d8-4aec-ad9a-8c27b113bb7b">A 'death spiral'</h2>While huge defense expenditures have contributed to economic growth in Russia and <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-ukraine-war-moscow-military-spending-currency-inflation-budget-2024-9">averted a recession</a>, they also fueled inflation.When it hiked the key interest rate to 21%, Russia's central bank said its mission was to tame inflation.In September, Russia's annual inflation rate rose to 8.6%, far above its 4% target.Sheremeta described the situation as a "death spiral," where war spending begets more inflation, which requires more war spending."What is even worse for those companies," he said of the defense firms, "is that they cannot export due to sanctions and sell their weapons for US dollars or Euros."Daniel Treisman, a professor of political science at the University of California, Los Angeles, and a research associate of the National Bureau of Economic Research, said Russia could end up with hyperinflation."As the budget deficit rises in the face of military costs, the need to cover part of it by printing money will drive prices ever higher, and the Central Bank will have to hike interest rates further to slow them," he said.<h2 id="2a236608-2617-4e7e-8687-d480f19dea32">A crisis point — but not yet</h2>The experts BI spoke to both said Russia could sustain its spending for a year or more before a crisis point.Some see even more runway.Iikka Korhonen, the head of research at the Bank of Finland Institute for Emerging Economies, said defense companies won't be allowed to go bankrupt, and would instead be restructured or bailed out.Russia has done that before, saving indebted defense firms in 2016 during an earlier financial crisis.If that doesn't fix the problem, "other sectors will be cut" to keep defense firms going, Korhonen said.Julian Cooper, Professor Emeritus at the Centre for Russian and East European Studies of the University of Birmingham, made similar remarks."If some defense companies cannot fulfill their obligations, the Kremlin can simply nationalize them," Sheremeta said.Konstantin Sonin, a professor at the University of Chicago Harris School of Public Policy, forecast a dark economic future ahead for Russia due in part to "borrowing" funds from the future.In an <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-ukraine-war-outlook-moscow-sanctions-west-firms-uchicago-2024-10">op-ed</a> for Project Syndicate earlier this month, Sonin wrote that massive investment in military production at the expense of key public spending programs may strengthen Putin's hand in the short term."But it sets a time bomb under longer-term economic development," he wrote."Whenever the Ukraine war ends and Russia returns to international trade (beyond raw materials), all the nationalizations of recent years will come back to haunt it," he wrote.

Russia's defense sector is running on overdrive — but firms are warning of bankruptcy

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Consumer goods, auto and healthcare sector to expand but energy may face challenge in 2025: Report

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Russia's defense sector is running on overdrive — but firms are warning of bankruptcy

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