Israel strikes Gaza City suburb, Palestinian medics say

The Israeli military kept up the pressure on northern Gaza on Wednesday, striking in a suburb of Gaza City, medics said, and told residents in a central part of the enclave to evacuate from an area where militants were firing rockets.

Air strikes in Shejaia, a suburb of Gaza City, killed at least eight Palestinians, according to local emergency services. There was no immediate comment from the Israeli military, and it was not immediately clear who was killed in the attack.

In al-Buriej, in central Gaza, the Israeli military said it struck a militant operating in an area where rockets had been fired into Israel the previous day. Its Arabic spokesman had ordered people to leave the area before the strike.

The Palestinian news agency WAFA said two people were killed in that strike and 15 more in an airstrike in Jabalia. There was no immediate confirmation from Gaza health officials. Israel's military said it killed Hamas fighters in the attack.

Much of the area around the northern towns of Beit Hanoun, Jabalia and Beit Lahiya has been cleared of people and razed, fuelling speculation, which Israel denies, that it intends to keep the area as a buffer zone after the fighting in Gaza ends.

Israel says its almost three-month-old campaign in northern Gaza is aimed at preventing Hamas militants from regrouping. Its instructions to civilians to evacuate are meant to keep them out of harm's way, the military says.

Palestinian and United Nations officials say no place is safe in Gaza and that evacuations worsen the humanitarian conditions of the population.

According to the Palestinian civil defence, more than 1,500 tents sheltering displaced people across Gaza were flooded by heavy rains over the past two days, leaving people exposed to the cold, their belongings damaged.

Israel's campaign in Gaza has killed more than 45,500 Palestinians, according to health officials in the Hamas-run enclave. Most of Gaza's 2.3 million people have been displaced and much of the tiny coastal strip is in ruins.

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The war was triggered by Hamas' Oct. 7, 2023, attack on Israel, in which 1,200 people were killed and another 251 taken hostage to Gaza, according to Israeli tallies.

Reuters

WESTERN PERSPECTIVE

Two killed in Russian drone strike on Kyiv, Ukraine says

Russia launched a New Year's Day drone strike on the Ukrainian capital Kyiv early on Wednesday, killing two people, wounding at least six others and damaging buildings in two districts, authorities said.

Explosions boomed across the morning sky as Ukraine's air force warned of incoming drones and Mayor Vitali Klitschko said air defences were repelling an enemy attack.

Two floors of a residential building in central Kyiv were partially destroyed in the strike, according to the State Emergency Service. Two people were killed, it said.

Photos posted by the agency showed firefighters dousing a gutted corner of a building and rescuers helping elderly victims.

The National Bank of Ukraine said in a statement that one of its buildings nearby had been damaged by debris from a downed drone. Debris also damaged a non-residential building in a different neighbourhood, authorities said.

"Even on New Year's Eve, Russia was only concerned about how to hurt Ukraine," President Volodymyr Zelenskiy said on social media in response to the strike.

Kyiv's military said it had shot down 63 out of 111 drones launched by Russia overnight across various regions of Ukraine. Another 46 had been downed by electronic jamming, it added.

Russia has carried out regular air strikes on Ukrainian towns and cities far behind the front line of its nearly three-year-old invasion, in which its troops are claiming village after village in a grinding march across eastern Ukraine.

On Tuesday, Moscow's forces fired 21 missiles at Kyiv and the northern Sumy region during an overnight strike, damaging buildings and infrastructure in the city of Shostka.

Separately on Wednesday, a 23-year-old volunteer worker was killed by Russian shelling in the southern front-line city of Kherson, city officials said.

The governor of Kherson region, Oleksandr Prokudin, later said that a resident of a town northeast of the city died in hospital of injuries suffered during a drone attack.

RUSSIAN PERSPECTIVE

Ukraine loses up to 1,050 troops in all areas of special military operation in past day

The Ukrainian army lost up to 1,050 troops in all areas of Russia’s special military operation in the past day, according to the Russian Defense Ministry’s bulletin.

In particular, Kiev lost up to 45 troops in the zone of responsibility of Russia’s Battlegroup North in the Kharkov area, up to 330 troops in the area of responsibility of Battlegroup West, over 250 service members in the area of responsibility of Battlegroup South, up to 235 troops in the area of responsibility of Battlegroup Center, more than 150 servicemen in the area of responsibility of Battlegroup East and up to 40 troops in the area of responsibility of Battlegroup Dnepr.

Russian air defenses downed seven HIMARS and Uragan rockets and 66 Ukrainian drones in the past day, the ministry said in a statement.

"Air defenses shot down seven Uragan and US-made HIMARS rockets, as well as 66 fixed-wing unmanned aerial vehicles," the statement reads.

According to the ministry, a total of 650 aircraft, 283 helicopters, 39,047 unmanned aerial vehicles, 590 missile systems, 20,127 tanks and other armored combat vehicles, 1,504 multiple rocket launchers, and 20,120 field artillery mounts and mortars, as well as 29,684 special military motor vehicles, have been destroyed since the start of Russia’s special military operation.

Reuters/RT

It has now become something of a yearly tradition that someone would share a video of hundreds, or perhaps even thousands, of beggars lined up on one of the priciest real estates in Nigeria—Bourdillon Road, Ikoyi, Lagos. Already always striking in Nigeria, the paradox of poverty and prosperity jars your eyes. These people queue up for hours, their bodies exposed to weather action accruing the circumstances that will take eventual tow. Usually taken at night, the video displays these panhandlers seeking charity in the unofficial presidential residence.

To be clear, Bourdillon Road is not unique in this respect. I grew up in Ibadan, Oyo State, and the sight of economically challenged people assembling in front of the house of well-to-do Muslims to beg for alms is not exactly rare. If you mingle with them, you will marvel at the complexity of the poverty that will make someone travel—as they claim—a considerable distance to beg. You will be surprised at the distance some of those who resume at Bourdillon have travelled just to fritter away time while expecting the man—or any of his affluent visitors—to extend them some handouts.

People like that come expecting to be given alms because their shared religion with the benefactor stipulates that moneyed people must transfer some income to the poor to maintain the munificence of providence. That explains why wherever you have Islam and poverty, you are guaranteed a nuisance of beggars. That is also why I think FCT Minister Nyesom Wike was wasting time when he started haranguing beggars in the nation’s capital. When religion validates panhandling, you cannot do away with the social tradition it engenders by making a noise. Rich and well-organised Islamic countries do not have this problem for self-evident reasons.

Going by Bola Tinubu’s admission during his recent presidential media chat, it turns out that he has been hosting these professional charity seekers for as long as 25 years! Some of those beggars must be familiar with the street layout and its changing appearance and perhaps have been a fixture there long enough to share a vicarious interest in Bourdillon Road real estate value. They probably do not consider the ungainly sight of themselves hanging around the varnished surface of one of the choicest real estate a blemish but, in fact, as part of the value it carries.

In a society where you can earn social credit through ostentatious performances of charity, the sight of many humans begging an individual for their survival attests to the benefactor’s valour and value. They index his popular support, allowing the man to establish a populist ethos that ultimately shores his political capital. The more the man’s political value rises, the higher the price of items associated with him (including the street he lives). However unseemly the sight of those panhandlers might be, they are part of Tinubu’s wealth and that is probably why he has not thought of doing anything about them. In his media chat, Tinubu sounded as if their besiege of his homestead was an inevitable social reality. It does not look like a tradition that is about to cease.

One would think that after all these years, he should have thought of reorganising the beggars that converge on Bourdillon Road. If people have been crowding your streets for so long, and in that spate of time, you have held leadership positions ranging from governor to the shady title of “governor emeritus”, at what point does it strike you that the sight of suffering humans in front of your house should be considered an eyesore and, therefore, restructured into something more dignifying of humans? Here is a man who has occupied leadership positions for a quarter of a century but refuses to come up with an original idea regarding how to do charity while simultaneously maintaining people’s dignity and public decency.

Rather than having them line up on the streets just so they can be handed a pittance after they have been deemed to have suffered enough, why not establish proper feeding centres in several zones in Lagos, where people can show up at scheduled times to pick whatever welfare items you want to give them? Philanthropy should not require that people be debased before they are fed. We get it, maintaining a crowd feeds your inner Narcissus, but what of the associated risks of that many people standing by the roadside? Then there is the issue of the public resources that would need to be regularly deployed to maintain security around that place. As he is president, security agents must have had to heighten surveillance activities around his house to ensure that mischief-makers do not hide among those beggars. Why the need for that much waste when there are far more efficient ways of doing things? He can redirect the people to the feeding centres where trained personnel will take care of the business smoothly and humanely. If he does not want to run a charity programme all year round, the centres can do it quarterly. What matters is that the “human” is not taken out of humanitarianism.

Looking at that sight, I have also wondered if Tinubu ever spares a thought for his neighbours who invested in real estate only to be forced to endure the nuisance of beggars invading the area, especially around festive periods. Prime real estate as a place like Bourdillon Road claims to be should ideally be typified by an aesthetically pleasing environment. Three factors typically differentiate quality real estate—access (to cultural centres and the added benefit of the nearness of transportation infrastructure such as the airport), appearance (serenity, clean and well-maintained environment, good air quality, etc.) and amenities (from excellent public schools to well-maintained public parks). If you live in a place like Bourdillon Road, the last thing you should ever wake up to see is the endless queue of beggars. Otherwise, what is the point of purchasing luxury?

Beyond his neighbours, there is something about the sight of people hanging around a president’s residence that does not speak well of his leadership capabilities. Maybe no one has nudged him to see it, but the impression that spectacle on Bourdillon Road generates is that Tinubu enjoys the sight of suffering humans and thrives in—and through— their poverty. If all these years, impoverished people hang around you and you remain comfortable enough to keep them just so they can be handed tokens of your large heart, then it means you have a pro-poverty mindset. Such a frame of mind is oriented toward cultivating poverty rather than stimulating abundance. That is why he could unproblematically relate the story of his “friend” who went from using five Rolls Royce to a far-less valued car and not consider the import of the nonsense he was saying. That spurious account was an indication that this is a man for whom poverty—of others, not himself—is an ideal.

If how he thinks this is the way fathers of actual prosperous nations like the United Arab Emirates imagined wealth generation, the country would not be the haven that drives Nigerian leaders to rob people to just to buy their luxury estates. The difference in their respective mindset largely explains why his approach to economic reforms is to first beggarise the nation. His reforms could have been activated with a view toward generating prosperity not a sadistic mentality that relishes seeing someone with five Rolls Royce reduced to nothing, but no. Thanks to his vision, Nigeria now has more beggars, on the streets, social media, public bureaucracies, and corporate offices, likely more than at any time in its history. You can hardly greet people online these days without getting a request from someone begging for money.

Punch

Melissa Houston

Many want to be rich, but few are willing to follow the money rules that will make you rich. Building and maintaining wealth doesn’t happen by chance; it requires a clear strategy, discipline, and consistent action. While the journey may not always be easy, those who commit to these principles position themselves not just to achieve wealth but to sustain it over the long term.

The path to financial success often feels daunting but building wealth doesn’t require winning the lottery or stumbling upon a golden opportunity. Instead, it’s about consistent, disciplined actions over time. By following some timeless money rules, you can create a foundation for long-term wealth.

Here are some ideas to get you started today.

1. Live Below Your Means

Spending less than what you make is the key to wealth-building. While it’s tempting to splurge on the latest gadgets or designer items, the wealthy know that living frugally is key to financial freedom. You don’t need to deprive yourself of joy; you just need to make intentional choices about where your money goes.

Pro Tip: Adopt a “pay yourself first” strategy where you set aside a percentage of your income for savings before paying for anything else.

2. Create a Budget

A budget is your financial roadmap, guiding you toward your goals and helping you make informed decisions about how to allocate your money. It provides clarity on your income, expenses, and savings, ensuring you stay on track and avoid unnecessary financial stress.

By setting a budget, you gain control over your finances, allowing you to prioritize what truly matters and build a secure financial future. Whether you're saving for a big purchase, paying off debt, or investing in your future, a budget is the foundation of financial success.

Steps to Get Started:

· List all your income sources.

· List your expenses (fixed, variable, and savings).

· Adjust as needed to ensure you’re saving a portion of your earnings.

3. Track Your Spending

Creating a budget is just the beginning, as you need to follow through by tracking your spending. Small, unnoticed expenses and lifestyle creep can add up and put a significant strain on your financial goals. Regularly reviewing where your money goes ensures you stay on track.

Tools to Use: Apps like YNAB or a simple spreadsheet can help you track your expenses effortlessly.

4. Set Financial Goals

Setting short-term, medium-term, and long-term financial objectives gives you something to work toward. Whether it’s saving for a dream vacation, paying off debt, or retiring early, goals provide the motivation to stick to your plan.

SMART Goals Framework: Make your goals Specific, Measurable, Achievable, Relevant, and Time-bound. For example, “Save $30,000 for a down payment on a house in two years” is more effective than “Save money.”

5. Get Life Insurance

Life insurance might not seem like an obvious wealth-building tool, but it’s essential for protecting your financial foundation. If something happens to you, life insurance ensures your loved ones are taken care of and can maintain their financial stability.

Key Considerations:

· Choose between term life and whole life insurance based on your needs.

Ensure your coverage amount is sufficient to replace your income and cover outstanding debts.

6. Avoid Debt

Debt is a significant obstacle to building wealth. While some debt, like a mortgage, can be strategic, high-interest consumer debt, such as credit cards, drains your resources and limits your ability to save and invest.

Tips to Avoid Debt:

· Pay off debt as quickly as possible.

7. Invest Your Money

Saving alone won’t make you rich; investing is how you grow your wealth. Compound interest—the process of earning returns on both your original investment and its accumulated returns—is a powerful tool for wealth creation.

· Diversify your investments.

· Work with a professional if you’re unsure where to start.

Final Thoughts

The bottom line is that becoming rich isn’t about luck or secret formulas; it’s about making smart financial decisions consistently over time. By following these seven money rules, you’ll not only improve your financial health but also set the stage for long-term wealth and security. Remember, the small steps you take today will help your wealth grow.

Forbes

From the Pacific Islands to Africa and beyond, the world ushered in 2025 with a dazzling array of celebrations, marking the transition to the New Year in unique and spectacular ways.

Pacific Islands Lead the Charge

The festivities began in the Pacific, where Christmas Island (Kiritimati) in Kiribati became the first to welcome 2025 at 11:00 a.m. (Nigerian time) on December 31. Shortly after, New Zealand followed suit, with Auckland hosting vibrant fireworks displays viewed by thousands atop the city’s volcanic peaks. Tonga, Samoa, and Fiji joined the revelry, followed by Australia, where over a million people gathered at Sydney Harbour to witness the iconic fireworks over the Harbour Bridge. The event also included Indigenous ceremonies and performances celebrating Australia’s First Nations people.

Asia Welcomes the Year of the Snake

As the New Year wave moved westward, Japan, South Korea, and China celebrated with fireworks, prayers, and cultural events. The upcoming Year of the Snake in the Asian zodiac symbolized rebirth and renewal. Meanwhile, South Korea observed subdued festivities as the nation mourned victims of a recent aviation tragedy.

In Southeast Asia, Indonesia marked the occasion with an 800-drone fireworks display in Jakarta, while Bangkok’s shopping malls drew crowds with live music and light shows.

Europe Lights Up the Night

Paris closed a monumental year with fireworks at the Champs-Élysées, celebrating its hosting of the Summer Olympics in 2024. The Arc de Triomphe became a giant canvas for a light show celebrating the passage of time. In Rome, the festivities coincided with the beginning of Pope Francis’ Holy Year, drawing pilgrims to St. Peter’s Basilica for prayers and vespers.

Africa and the Middle East

In Nigeria, Ghanaians and Nigerians welcomed 2025 with fireworks, street celebrations, and gatherings at places of worship. Dubai hosted a spectacular display at the Burj Khalifa, while fireworks illuminated the skies over Nairobi and other African capitals.

Americas Celebrate Traditions Old and New

New York’s Times Square maintained its status as the epicenter of U.S. celebrations, with the iconic ball drop and performances by artists like TLC and the Jonas Brothers. Rio de Janeiro’s Copacabana Beach hosted 2 million revelers decked out in white for its famous fireworks and concerts by Brazilian music legends. In Las Vegas, a pyrotechnic show lit up the Strip, while Pasadena prepared for the Rose Parade.

Final Farewell in the Pacific

As the clock struck midnight in American Samoa, the last place on Earth to welcome the New Year, the global celebration came full circle.

Across time zones, the world embraced the start of 2025 with hope, joy, and the enduring tradition of coming together to celebrate new beginnings.

With reports from Associated Press and Vanguard

Starting Wednesday, Nigeria will require applicants for oil licences and permits to demonstrate plans for low carbon emissions and renewable energy integration before approvals are granted, according to Gbenga Komolafe, the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

The new policy aligns with Nigeria’s commitment to achieving net-zero carbon emissions by 2060. To support this initiative, the NUPRC has introduced the Upstream Petroleum Decarbonisation Template (UPDT), which provides guidelines for applicants.

Komolafe stated that enforcement of the new requirements will begin on January 1, 2025, encompassing all upstream sector approvals, including divestments.

“This initiative deepens our efforts to align the upstream petroleum industry with national priorities and international climate goals, while ensuring sustainable value creation from oil and gas resources to bolster Nigeria’s energy security and economic development,” he said.

The regulations will compel operators to:

• Implement methane management programs, including leak detection and repairs.

• Optimize operations with energy-efficient technologies.

• Incorporate renewable energy sources into project plans.

Ivory Coast has announced that French troops will withdraw from the West African nation, further reducing the military influence of the former colonial power in the region.

In an end-of-year address, Ivory Coast's President, Alassane Ouattara, said the move was a reflection of the modernisation of the country's armed forces.

Separately, Senegal, which last month announced France would have to close its military bases on its territory, confirmed the withdrawal would be completed by the end of 2025.

Ivory Coast is home to the biggest remaining contingent of French troops in West Africa.

There are some 600 French military personnel in the country with 350 in Senegal.

"We have decided in a concerted manner to withdraw French forces from the Ivory Coast," President Ouattara said.

He added that the military infantry battalion of Port Bouét that is run by the French army would be handed over to Ivorian troops.

France, whose colonial rule in West Africa ended in the 1960s, has already pulled its soldiers out of Mali, Burkina Faso and Niger following military coups in those countries and growing anti-French sentiment.

The government of Chad - a key Western ally in the fight against Islamic militants in the region - abruptly ended its defence co-operation pact with France in November.

Senegalese President Bassirou Dioumaye Faye said: "I have instructed the minister for the armed forces to propose a new doctrine for co-operation in defence and security, involving, among other consequences, the end of all foreign military presences in Senegal from 2025."

Faye was elected in March on a promise to deliver sovereignty and end dependence on foreign countries.

France will retain a small presence in Gabon.

Military leaders of Niger, Mali and Burkina Faso have moved closer to Russia since kicking out French troops from their countries.

Russia then deployed mercenaries across the Sahel to help them fight off jihadist insurgents.

There are indications that France has now got fewer than 2,000 troops in Djibouti and Gabon.

Political watchers believe that France has been making efforts to revive its waning political and military influence in Africa.

The former political power now appears to be devising a new military strategy of downscaling military ties - a measure that would sharply reduce its permanent troop presence on the continent.

For more than three decades after its independence from France, Ivory Coast (also known by its French name, Côte d'Ivoire) was known for its religious and ethnic harmony, as well as its well-developed economy.

The Western African country was hailed as a model of stability. But an armed rebellion in 2002 split the nation in two. Peace deals alternated with renewed violence as the country slowly edged its way towards a political resolution of the conflict.

Despite the instability, Ivory Coast is the world's largest exporter of cocoa beans, and its citizens enjoy a relatively high level of income compared with other countries in the region.

BBC

Yemen will continue to defend itself, say Houthis after US strikes

Yemen's Houthi spokesperson Mohammed Abdulsalam said that the country would continue to defend itself after several U.S. strikes targeted facilities in the capital Sanaa on Tuesday.

The U.S. military said that it carried out strikes against Houthi targets in Sanaa and coastal locations in Yemen on Monday and Tuesday.

"On Dec. 30 and 31, U.S. Navy ships and aircraft targeted a Houthi command and control facility and advanced conventional weapon (ACW) production and storage facilities that included missiles and uncrewed aerial vehicles (UAV)," the U.S. military's Central Command said in a post on X.

The Iran-backed militant group in Yemen has been attacking commercial shipping in the Red Sea for more than a year to try to enforce a naval blockade on Israel, saying they are acting in solidarity with Palestinians in Israel's year-long war in Gaza.

Reuters

WESTERN PERSPECTIVE

Ukraine hits Russian oil depot in Smolensk region

The Ukrainian military said on Tuesday its forces had hit a Russian oil depot in the western Smolensk region, setting fire to tanks storing oil products.

Ukraine's general staff said on the Telegram app that the depot was used for military purposes. It did not specify the weapon used for the strike but said it was carried out in cooperation with drone forces.

Smolensk region governor Vasily Anokhin said that the attack caused a fuel spill and fire.

According to his statement on Telegram, 10 Ukrainian drones were shot down by Russian air defences but the wreckage of one of them fell on the oil facility.

Ukraine has staged numerous attacks on Russian oil storage facilities and refineries.

According to the general staff, there were powerful explosions and thick smoke after the attack on the Smolensk depot.

Anokhin did not provide additional details but said the situation was "under control".

RUSSIAN PERSPECTIVE

Ukraine ‘has ceased to exist’ – ex-commander

The Ukrainian state has essentially ceased to exist, is plagued by endemic institutional failure and corruption, with Kiev's troops continuing to hold on by sheer will alone, a former commander has argued. He also warned that Ukraine’s defenses could collapse, allowing Russia to march all the way to the Dnieper River.

In an interview with Novyni Live on Monday, Vladimir Shylov, former commander of the 3rd Company in the 134th Separate Territorial Defense Battalion, lashed out at Ukraine’s political leadership, stating that the country has “ceased to exist” as a functional state due to widespread graft and mismanagement.

Shylov expressed concern that these woes could allow Russian forces to increase their gains, warning that they may be able to overrun frontline positions in Donbass and reach as far as the Dnieper River. The advances could be facilitated by internal chaos, he added, stating “In our country, everything is a mess...the front is holding only thanks to the Ukrainian people.”

Ukrainian leaders have transformed the nation into a “concentration camp,” Shylov claimed, highlighting systemic failures across all branches of government, including the legislative, executive, and judicial sectors. 

Shylov also specifically criticized the country’s leader, Vladimir Zelensky, for what he described as a blatant neglect of his defense responsibilities, alleging that his government had ignored Western warnings of a Russian offensive prior to the special military operation, resulting in the inadequate preparation of Kiev’s forces.

The ex-commander went on to comment on Ukraine’s ongoing incursion into Russia’s Kursk Region, portraying it as a political ploy without any real strategic military value. He argued that the Ukrainian offensive had turned out to be a symbolic gesture which does not compensate for the substantial territorial losses Ukraine has suffered, particularly in Donbass.

Over the past several months, Russia has made significant gains in Donbass and elsewhere, with President Vladimir Putin noting that regular advances now amount to kilometers rather than hundreds of meters.

Russian Defense Minister Andrey Belousov said earlier this month that Ukraine had lost one million service members since February 2022, with more than half of that number in 2024 alone, adding that Moscow’s forces are in full control of the strategic initiative.

Meanwhile, Ukrainian battlefield commanders continue to complain of a critical shortage of manpower, despite Kiev implementing stricter mobilization rules and lowering the draft age from 27 to 25 this spring.

Reuters/RT

It is something of a tradition every December to take stock of the year that is ending and consider what might lie ahead. This is true on a personal level: in my family, we tend to do this around the dinner table. But it is also true more broadly, with the time of year inviting an examination of the intersection of economics, national politics, and global geopolitics.

You would be forgiven if, as a starting point, you expected these three areas to be in alignment. After all, they are deeply interconnected, which suggests self-reinforcing dynamics. But 2024 brought some unusual dispersion in this relationship that actually widened, rather than narrowed, over the course of the year.

Begin with geopolitics. In 2024, Russia secured a greater advantage in the Ukraine war than the consensus forecasts of a year ago anticipated. Similarly, the human suffering and physical destruction resulting from the Israel-Hamas war in Gaza exceeded most observers’ already-grim expectations, and spread to other countries, such as Lebanon. The apparent impunity of the strong, together with the absence of effective means of preventing dire humanitarian crises, has deepened the sense for many that the global order is fundamentally imbalanced, and lacks any enforceable guardrails.

As for domestic politics, upheaval has been the order of the day in many countries. Governments have collapsed in both France and Germany – Europe’s largest economies – leaving the European Union without political leadership. And following Donald Trump’s victory in last month’s presidential election, the United States is preparing for a political transition that is likely to bring a significant increase in the political influence of a new “counter-elite.”

Meanwhile, an “axis of convenience” – comprising China, Iran, North Korea, and Russia – is seeking to challenge the Western-dominated international order. Other recent developments – from the now-impeached South Korean president’s abrupt declaration of martial law (which was quickly reversed) to the collapse of Bashar al-Assad’s regime in Syria – have reinforced the impression that we are living at a time of exceptional geopolitical and political volatility.

The last year also brought some worrisome macroeconomic developments. Europe’s malaise has deepened, as countries grapple with low growth and large budget deficits. And China has failed to respond credibly to the clear and present danger of “Japanification,” with unfavorable demographics, a debt overhang, and a prolonged property-market downturn undermining growth, economic efficiency, and consumer confidence.

And yet, stock markets have remained relatively stable and delivered high returns, including almost 60 record-high closes for the S&P index. The US economy’s exceptional performance is a major reason why. Far from weakening, as most economists expected, the US pulled even further ahead. Given the amount of foreign capital the US is attracting, and the scale of its investment in the future drivers of productivity, competitiveness, and growth, it is likely to continue outperforming other major economies in 2025.

One consequence of this success is that the US Federal Reserve did not deliver the soothing 1.75-2-percentage-point interest-rate cuts that markets were pricing in a year ago. This trend, too, is set to continue: at December’s policy meeting, the Fed signaled fewer cuts in 2025, and a higher terminal (long-run) rate.

But political and geopolitical upheaval – and the limited prospects for significant improvements – does pose a risk to the endurance of US economic exceptionalism. Even if the US continues outperforming its peers, as expected, the range of possible outcomes, in terms of both growth and inflation, has widened. In fact, global economic and policy outcomes as a whole are now subject to a larger possibility set, both because the downside risks have grown and because upside innovations – such as in artificial intelligence, life sciences, food security, health care, and defense – could transform sectors and accelerate productivity gains.

Absent a major policy reset, my baseline scenario for the US includes a somewhat lower immediate growth rate, even as the economy outperforms its peers, and sticky inflation. This will present the Fed with a choice: accept above-target inflation or attempt to bring it down and risk tipping the economy into recession.

Globally, economic fragmentation will continue, pushing some countries to diversify their reserves further away from the US dollar and explore alternatives to Western payment systems. Yields on US ten-year government bonds – a global benchmark – will edge higher, trading mostly in the 4.75-5% range. As for financial markets, they might find it more challenging to maintain their status as the “good house” in a challenging geo-economic neighborhood.

This is how things appear now. But, beyond recognizing the wider dispersion of possible economic outcomes in 2025, it will be crucial regularly to test whichever baseline one embraces against actual developments.

Project Syndicate