On behalf of everyone at LGT, I would like to wish you a very happy new year. I hope the holiday season was relaxing and enjoy-able. As we start this new year, I would like to take the opportunity to reflect on the last 12 months and share some of my thoughts about the road ahead.
In economic terms, 2024 was characterised by a widespread drop in inflation and by interest rate cuts. The global economy grew by around 2.7 %, with Europe and China delivering a disappointing performance and the US faring better than expected. The forecasts for 2025 are similar to last year’s, and barring any major surprises, the world economy is expected to grow by between 2.5 % and 3.0 %. The growth forecast for the US economy is 2.5 %, while China and the EU are expected to see growth of 4.5 % and 0.8 %, respectively. With a forecasted growth of 6 %, India is once again expected to be the fastest-growing major economy.
Following the one-off effects of the pandemic, a drop in inflation and lower interest rates fuelled the normalisation of the global economy in 2024, giving equity markets such a strong boost that many stock market indices reached all-time highs. Thanks to this momentum and the positive developments in bond markets, many of our clients’ portfolios performed well last year. The IPO and private equity markets, however, did not fare as well. Against a backdrop of comparatively high interest rates, most private equity investors remained cautious and were in no hurry to sell their companies. The number of investments, exits and valuations in this segment therefore remained relatively low in 2024.
Considering the magnitude and range of today’s global challenges, last year’s strong stock market performance may have come as a surprise to many people. Demographic trends, the massive rise in sovereign debt, increasing social and political polarisation, the rapid acceleration of climate change and the resulting loss of biodiversity are all factors that will pose major challenges for the global economy and governments in the years to come. And it remains to be seen how successfully these challenges will be addressed. Unfortunately, the world still lacks strong, forward-thinking political leaders with a clear strategy and a proven track record who enjoy broad political support.
Donald Trump’s return to the White House will no doubt bring some momentum to international politics and the global economy. It will be interesting to see what he achieves during his second term. I think there is a good chance that Trump will be able to use his influence to help end the war in Ukraine. And if the terms that are agreed to are reasonable, the rest of the world stands to benefit. However, when it comes to Donald Trump’s other economic and political priorities, the level of uncertainty is much higher, both in terms of how he will implement them and what their domestic and global impact will be. We are also closely monitoring the developments in China and Europe. We are hopeful that the outcome of Germany’s early federal elections will improve the economic and political climate in Germany and the EU as a whole.
In terms of LGT’s business activities, we are currently reaping the benefits of our long-term, forward-looking strategy, which we have implemented capably and very successfully over the past decades. One example that comes to mind is our international growth and expansion strategy, which has enabled us to significantly grow and diversify our business, both in private banking and asset management.
Another good and important decision that we made was to launch a global digitalisation programme. Last year, we continued to develop our digital solutions, investing significantly in our IT infrastructure and adding resources in areas such as generative AI.
Although these strategic IT investments come with a substantial price tag that negatively impacts our short-term profitability, they are necessary if we want to continue offering you, our valued clients, high-quality products and efficient services in the future.
In 2024, we continued to achieve solid growth despite the difficult environment. This is thanks in large part to our outstanding employees working at our locations around the world, and to our healthy corporate culture, which we live, foster and cultivate. Above all, however, we owe this success to you, our esteemed clients. We thank you for your loyalty and trust, and look forward to partnering with you again in 2025.
I wish you and your family good health, much happiness and success in the new year.
Sincerely,
H.S.H. Prince Max von und zu Liechtenstein
Chairman LGT
