Leading to 2025: Relentless Uncertainty or Domino Effect?

In my last article, I outlined somewhat optimistic scenarios for 2024. Well, throw them all away! In these last few months, variables and certain events have been a little more dramatic in nature due to the increasing complexity of the economy worldwide. Russia and Ukraine seem fully engaged in continuing their war due to Putin’s aggression of invading territories he considers Russian influenced. It is now almost a two-and-a-half-year conflict. Israel and Palestine have not fully agreed on a ceasefire that would include a prisoner swap,  and some sort of agreement on what comes next with the help of Arab countries, the European Union and the United States. To add to the turmoil for markets, there is the issue of Chinese semiconductor chips and the manufacturing of US supply now from our own continent, as well as the ongoing, 24/7 news cycle for the US presidential election between Donald Trump, who has been found guilty on 34 criminal counts, and likely opponent incumbent Vice President Kamala Harris, who is the front-runner to replace President Joe Biden on the Democratic ticket. Biden abandoned his reelection bid after a slow and stuttering debate performance.  Add to all that the unfortunate assassination attempt on Donald Trump. Trump will only increase his momentum to regain the White House by whatever means necessary. Yes, I said “whatever,” because the U.S. Supreme Court has specified that presidents have immunity for official events and little to none for non-official events. 

From our Mexican perspective, after the astonishing support for the party in power in our own presidential election last month, the result being an overwhelming 2:3 ratio win, means there will be major political reforms to judicial powers and a reshaping of the justice system, along with more infrastructure projects. All this while continuing the social programs of providing more cash in hand to citizens 65 and over every month, in addition to whatever pension or welfare they may receive, either private, social security or other, which sounds quite amazing. The country’s current deficit is the highest since 1993. There was already an apparent agreement to negotiate a eform to avoid peso-dollar fluctuations, which resulted in a sudden 10% peso devaluation as the markets seemed uneasy about the forced changes. The major takeaways for the final half to come are that Mexico could agree on reforms moving forward, taking into consideration the minority opposition in Congress to hear all voices and come to a negotiated conclusion, or let our country face the music on the peso fluctuation, with foreign companies concerned over legal guarantees for their well-invested businesses and hopes that mediation will be unbiased. 

The same can be said about the U. presidential election in that the United States will promise to be a hard negotiator over the newest revision of the USMCA in order to benefit its companies and workers over the Mexican side. 

Overall, the business environment feels anxious as these multiple scenarios move from one side to the next. It is becoming increasingly difficult to predict any type of outcome as variables continue to move in this unprecedented, new territory, especially after the assassination attempt on Trump at a political rally in one of the key swing states. Also, a new vice presidential pick for the Republican ticket has been announced (JD Vance) and the choice guarantees a big fight in certain mid-Western swing states that  could sway the decision in the November election. 

What about our aerospace industry and demand right now? Well, Boeing and also Airbus have been experiencing changes. Transformational change is something Boeing will be forced to do after the financial impact from its plea deal with the Justice Department that will likely see it pay a fine of up to half a billion US dollars for fraud related to the 737 MAX series. Airbus also experienced slow sales. All this will affect the entire supply chain of the industry. Fewer planes flying means fewer passengers moving, therefore the economy slows and consumer sentiment along with it. In one sentence, global aerospace and aviation is about to see a very substantial period of change.

Hastening this change are  technological advancements related to artificial intelligence. This summer has seen quite an uptick in travel demand, but it will cool down afterward, and it could affect airlines’ revenue as fewer planes fly and more people want to travel. Manufacturing jobs remain steady and inflation in the United States continues to  hover below 3%, but consumer sentiment is off. The aerospace industry is still poised to continue growing until 2029, as demand will continue to grow exponentially until it stabilizes. In regard to talent, more experienced engineers and technicians will be required as more complex changes are made to overhaul airplanes with the latest technology. 

We are back in mixed results territory, as all these situations that are happening around the world continue to add turmoil and anxiety. If this holds, 2025 could be a year for stabilization, and to try to tame all these variables. The European Union has been going through some changes as well. Take the United Kingdom, where there is a new prime minister from the left after 14 years of Conservative rule. Even Brexit will be under tough scrutiny amid calls to reopen borders with their European neighbors. Also France, with a recent mixed election for Macron’s alliance, now sees the left taking some power, and negotiating with the French president amid slower  far right advances politically. Also, the Middle East with Iran having its most recent election after its president died in a helicopter accident. Again, If the world gets its correction economically speaking, we could see the Israel-Palestine conflict end in a major negotiation with great prospects into the future. The Russia-Ukraine war will still be  a question mark regarding whether there will be  a negotiated conclusion, but questions also arise when the Crimea region comes into the equation, something Ukraine will not easily accept letting go of. Climate change issues are also at a critical point, in addition to AI and how investment into new technologies will shift for the good.