Reasons to be gloomy, but ING economists ask…could we be pleasantly surprised?
Global economies are either on track to repeat or are already repeating many of the tried, tested and failed lessons and policies from recent history in 2025 – including tariffs, trade wars and isolationism. There is a real sense that global economies now need to move on, in the face of mounting market and political headwinds.
These are central views from ING’s Macro Outlook for 2025, Economics, actually: Our 2025 hit list, published today by its team of Economists. The outlook includes three calls for different regions and markets – ranging from geopolitics, to trade, to consumer spending in Europe, to Asia, to the UK. The Economists’ bold predictions highlight opportunities for unexpected outcomes – some of these more upbeat – and all of them providing food for thought.
Marieke Blom, chief economist and head of research, ING, said: “We see many downside risks, but consumer spending may surprise on the upside. There is a possibility that the European consumer will finally go out and spend, especially if the housing market recovers faster than we expect. They hold an important key to the revival of Europe’s economic cycle.”
The direction of travel from here is in the hands of politicians. Central questions include whether tariffs will be as severe and expansive as threatened, how Trump’s stance on Ukraine will evolve and the nature of European policy relations with the US administration.
Germany will hold elections in February and faces the need for an economic overhaul, but may opt for investments first. UK performance exceeded Western Europe most of 2024 and Rachel Reeves’ new budget should result in a boost of energy in the new year. China saw the approval of a new fiscal programme at the National People’s Congress meeting. For the rest of Asia trade wars may be disinflationary, pushing central bank policy rates down.
Carsten Brzeski, global head of macro and chief economist, Eurozone, Germany, Austria, ING, said: “This year, we have seen a decade’s worth of political and economic action. The question I would ask – why are our global leaders seemingly so intent on pushing the same themes that have been tried, tested and often failed on us yet again? Tariffs, trade wars, isolationism, stagnating investment, kicking the can… I think we deserve better, actually.”
Further highlights covered in ING’s Macro Outlook for 2025 include:
On Global Economic outlook, global risks and trade:
- Central bankers claim an inflation victory, but ING’s economists remain wary of premature celebrations, questioning projections into 2025.
- Washington’s strategic manoeuvres may spark a trade boom by 2025
The US
- Could Trump prove a boon for the US economy? As a bold call, ING weighs the risks and rewards at home in the US, and the implications abroad.
Europe and UK:
- Southern Europe shines: Portugal, Italy, Greece, and Spain continue to outpace eurozone growth, a trend ING expects to persist in 2025.
- Divergent paths: The UK’s growth outpaces the eurozone on government spending gains, while Central and Eastern Europe’s stalled disinflation signals a slower recovery and cautious central banks.
Asia:
- China braces for tougher stabilisation challenges in 2025, but policymakers seem prepared to step up.
- India solidifies its role as Asia’s growth engine, driving regional momentum.
- Emerging Asian economies like Indonesia and the Philippines gear up for deeper-than-anticipated rate cuts.
Markets
- 2025 shapes up as a year of dollar strength, though a softer US economy or a Republican push for a weaker currency poses risks.
- US yields drive wider rate spreads, while eurozone yields may rise modestly before retreating later in the year.