Weekly Economic Update: IGA Capital

Date: Monday, December 29, 2025

I. 2025 Global Macroeconomic Recap

The 2025 economic landscape was characterized by a gradual moderation in inflation and divergent growth paths across major economies.

• Growth Outlook: Global real GDP growth is estimated at 3.0% for 2025. Advanced economies faced a sharper slowdown, averaging 1.5% growth.

• Inflationary Trends: Global headline inflation is projected to have fallen to 4.2% in 2025 from 5.7% in 2024.

II. Global Equity Indices Performance

Equity markets saw light trading volume as the final week of 2025 commenced, with major averages pulling back from recent all-time highs.

Index	Closing Value (Dec 29)	Daily Change	YTD Performance
NASDAQ Composite	23,474.35	-0.09%	+22.91%
S&P 500	6,929.94	-0.03%	+19.32%
Dow Jones (DJIA)	48,710.97	-0.04%	+16.47%
FTSE 100 (UK)	9,869.05	-0.02%	N/A
Hang Seng (HK)	25,635.00	-183 pts	N/A

III. Regional Data Highlights: UAE & EU

United Arab Emirates (UAE)

The UAE continued to outperform regional and global peers, driven by robust non-hydrocarbon sector expansion.

• GDP Growth: Real GDP is projected to expand by 4.8% to 4.9% in 2025.

• Price Stability: Inflation remained remarkably contained at 1.6% for the year, largely due to easing energy and transportation costs.

• Sector Performance: Residential real estate sales transactions increased by 13.7% year-on-year in the first five months of 2025.

European Union (EU)

The EU economy demonstrated resilient but modest growth amid geopolitical and trade-related headwinds.

• GDP Growth: Annual average real GDP growth is projected to be 1.4% in 2025. The third quarter saw a seasonally adjusted increase of 1.6% compared to the same period last year.

• Inflation: Annual inflation in the euro area stood at 2.1% toward year-end.

IV. Commodities Complex: Year-End Snapshot

Commodities experienced significant volatility in late December, driven by profit-taking and margin adjustments after a record-breaking year.

Commodity	Spot Price (Dec 29)	2025 Performance / Notes
Gold	$4,355.00/oz	Hit a record high above $4,500/oz earlier in December.
Silver	$73.00/oz	Touched an unprecedented $84.00/oz before a year-end pullback.
Crude Oil (WTI)	$58.08/bbl	Increasing +1.52% on December 29 amid Middle East tensions.
Natural Gas	$4.687/MMBtu	Increased +0.321 in the latest daily session.

V. Digital Assets: Market Structure and Valuation

The digital asset market remains an environment defined by high-magnitude valuation shifts and year-end profit taking.

• Bitcoin (BTC): Trading at $87,159.25 as of the December 29 snapshot. This is significantly lower than its all-time high of $126,000 reached on October 6, 2025.

• Market Sentiment: Sentiment remains gripped by "Extreme Fear," with the Fear & Greed Index at 24. The total crypto market cap stands at $3.04 trillion.

VI. US EXIM Bank: 2025 Africa Funding Operations

In 2025, the Export-Import Bank of the United States (EXIM) maintained a strategic focus on infrastructure and energy projects across Africa.

• Senegal: Supporting design engineering and construction services with nearly $91.5 million in loan guarantees to increase rural electricity access.

• Gabon: Authorized a $11 million loan guarantee supporting the export of locomotives for the national railway system.

• Cameroon: Authorized $13 million in loan guarantees for the purchase of diesel-electric locomotives to support fleet modernization.

VII. Monetary Policy: US Federal Reserve Data

• Current Rate Environment: The Federal Funds Effective Rate stands at 3.64% as of December 29.

• Market Projections: Futures markets are currently pricing an 81.2% probability of the rate holding in the 350-375 bps range following the January 28, 2026, FOMC meeting.

• Yield Curve: The 10-Year Treasury yield is currently 4.11%. The yield curve remains upwardly sloped, with the 2s/10s spread at 0.64% and the 5s/30s spread at 1.11%.

In 2025, the convergence of Artificial Intelligence (AI) and Energy Infrastructure has emerged as a primary driver of private equity activity, while Rare Earth Elements (REEs) have shifted from niche commodities to critical national security assets.

I. Private Equity Trends: The AI and Energy Convergence

As AI transitions from experimental models to operational scale, private equity (PE) is increasingly targeting the physical infrastructure that powers this shift.

• Data Centers as Infrastructure: Once viewed primarily as real estate, data centers are now reclassified as "mission-critical infrastructure." For instance, the $40 billion sale of Aligned Data Centers marked a defining moment in this sector's consolidation.

• The "Power Play": PE firms are aggressively acquiring existing power plants and proposing new facilities to meet the energy demands of data centers, which are projected to see a 165% increase in power demand by 2030.

• Massive Capital Deployment: * Blackstone announced a $25 billion investment in data centers and energy infrastructure in Northeast Pennsylvania.

  • KKR and Energy Capital Partners formed a $50 billion strategic partnership to scale data center and power generation projects globally.

  • A consortium led by Apollo Global Management committed $750 million to Wolfspeed, a leader in silicon carbide technology for power-efficient semiconductors.

II. Strategic Minerals: Rare Earths in 2025

The REE market has hit "critical mass," evolving into a full-spectrum industrial race as Western governments and private equity seek to break China's dominance in the supply chain.

• Nationalization of Upstream Assets: Strategic mines like MP Materials have effectively become national assets, receiving substantial federal support. The Department of Defense invested $400 million in MP Materials through convertible preferred stock and warrants, establishing a 15% federal ownership stake.

• Industrial Scaling of Magnets: A historic $1.4 billion rare earth magnet partnership was launched between the U.S. government and private manufacturers (Vulcan Elements and ReElement Technologies) to achieve an annual production scale of 10,000 metric tonnes of NdFeB magnets.

• Focus on Heavy Rare Earths: Dysprosium (Dy) and Terbium (Tb) remain the most critical bottlenecks. PE-backed initiatives are racing to build midstream separation plants to break China's 85% control of global refining capacity.

• Secondary Recovery: The U.S. Department of Energy announced $134 million in funding to recover and refine REEs from unconventional feedstocks such as mine tailings and e-waste.

Mineral	Key AI/Infrastructure Application	PE/Gov Target Status
Neodymium (Nd)	Permanent magnets for data center cooling and EV motors.	High Priority: $1.4B domestic magnet partnership.
Dysprosium (Dy)	High-temperature stability in high-performance magnets.	Critical Bottleneck: Massive midstream financing focus.
Praseodymium (Pr)	Magnet production and fiber optic amplifiers.	Increasing Demand: 300% projected growth by 2030.

III. Strategic Outlook for 2026

The market expects a structural supply-demand gap for non-Chinese permanent magnets to persist until at least 2028–2030. Consequently, PE firms are expected to move earlier into development-stage projects, taking on more construction and permitting risk than in previous cycles to secure future capacity.

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