Global economic growth: Not quite “dancing through life”<\/strong><\/p>\n\n\n\n Global real GDP growth is expected to remain moderate but steady at +2.8% in 2025-26. <\/p>\n\n\n\n We expect developed economies to experience a slight slowdown, with growth tapering from +1.8% in 2025 to +1.7% in 2026. <\/p>\n\n\n\n In contrast, emerging economies are likely to sustain robust growth at +4.1% across both years. The US economy is forecasted to grow at +2.3% in 2025, slowing to +1.8% in 2026. <\/p>\n\n\n\n The Eurozone is projected to grow by +1.2% in 2025 and +1.5% in 2026, with countries like Spain and Ireland leading with higher growth rates. <\/p>\n\n\n\n Germany, however, is set to record modest growth after two years of recession. <\/p>\n\n\n\n China’s growth is projected to moderate from +4.6% in 2025 to +4.2% in 2026 as the country continues to transition towards a more consumption-driven economy while managing external trade pressures.<\/p>\n\n\n\n Is \u201cSomething bad\u201d on the way?\u00a0<\/strong><\/p>\n\n\n\n Political changes, such as the US elections, could reshape economic landscapes and introduce uncertainties. <\/p>\n\n\n\n Geopolitical risks, including tensions between major powers, continue to be a significant concern for global stability. <\/p>\n\n\n\n A potential trade war by Q2 2025, with US tariffs rising to 60% for China and 10% for others, could increase US inflation and weaken global growth. <\/p>\n\n\n\n Significant US immigration cuts might strain labor markets in key sectors and add to inflationary pressures. <\/p>\n\n\n\n Challenges to the Federal Reserve’s independence, including possible currency interventions, could dramatically increase financial risks. <\/p>\n\n\n\n Fiscal policy changes, such as major spending cuts or extensive tax cuts, could impact market confidence. <\/p>\n\n\n\n In the Middle East, a tougher US stance on Iran could slow growth and raise oil prices. <\/p>\n\n\n\n Similarly, reduced US support for Taiwan might lead to tariffs and negatively impact semiconductor equities. <\/p>\n\n\n\n The climate and energy transition faces challenges, with the potential repeal of the Inflation Reduction Act, which could maintain neutral growth and reduce inflation while boosting fossil equities.<\/p>\n\n\n\n \u201cNo one mourns the wicked\u201d: Inflation should finally retreat to 2% in 2025, allowing for monetary policy easing to continue until end-2025<\/strong><\/p>\n\n\n\n However, upside risks remain from potential tariff implementation in the US and unfolding retaliation measures. <\/p>\n\n\n\n Further supply-chain constraints, from the rise in protectionist measures and ongoing conflicts triggering higher transportation costs, could temporarily increase inflation. <\/p>\n\n\n\n The Fed, the BoE and the ECB are expected to lower rates to 3.5%, 3.25% and 2% by end-2026, respectively. <\/p>\n\n\n\n Emerging markets are also likely to see cautious monetary easing, except for countries like Brazil, which may face rate hikes due to economic overheating.<\/p>\n\n\n\n \u201cNo good deed\u201d goes unpunished: Government bond yields are expected to remain broadly stable over the next two years\u00a0<\/strong><\/p>\n\n\n\n The effects of large US fiscal deficits and accelerated quantitative tightening in Europe will offset the downward pressure from falling policy rates. <\/p>\n\n\n\n French bond spreads are likely to remain wider than those of Spain, reflecting comparatively weaker fundamentals for France, while swap spreads in Europe should remain close to zero.<\/p>\n\n\n\n But the outlook is not entirely \u201cwonderful\u201d for risky assets<\/strong><\/p>\n\n\n\n Recovering earnings and strong fundamentals should support risky assets, with equities projected to deliver an average total return of 8-10% and credit spreads likely to remain steady through 2025 and 2026. <\/p>\n\n\n\n However, high valuations, economic uncertainty and concentration risks could cap gains and leave risky assets exposed to unexpected political or economic shocks.<\/p>\n\n\n\n \u201cWhat is this feeling?\u201d: Uncertainty continues for companies<\/strong><\/p>\n\n\n\n While policy shifts and geopolitical risks present challenges, sectors like AI and technology are expected to see growth. <\/p>\n\n\n\n Investment in infrastructure and sustainable sectors is also projected to increase. <\/p>\n\n\n\n Business insolvencies are expected to increase by +2% in 2025 and to stabilize at high levels in 2026. <\/p>\n\n\n\n Authors (Refer to report)<\/p>\n\n\n\n Click here to download the report.<\/a><\/strong><\/p>\n\n\n\n\n
![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/02\/Allianz-Trade-report-authoers-1024x277.png\")
<\/a><\/figure>\n\n\n\n