Based on Swiss Life Asset Managers' April 2025 report
In its April 2025 Economic Report, Swiss Life Asset Managers offers a nuanced analysis of the global economy. While some regions are entering a phase of stabilization, others continue to evolve in an environment marked by monetary, budgetary and geopolitical uncertainties. The year 2025 promises to be a period of transition, in which political decisions and monetary inflexions will play a decisive role.
Source: Consensus Economics Inc, London, March 13, 2025
USA: slowing domestic demand, cautious Federal Reserve
The downward revision of US growth forecasts reflects a less favorable dynamic, particularly in private consumption. Although the labor market remains resilient, the delayed effects of monetary tightening are being felt. The debate surrounding a potential "Mar-a-Lago deal", evoking a possible coordinated devaluation of the dollar in a sensitive electoral context, adds a layer of uncertainty to the economic and trade outlook.
Eurozone: prolonged stagnation but signs of monetary easing
After two years of near-stagnation, the eurozone economy is now showing a significant output gap. This situation could justify an acceleration of the monetary easing cycle. Faced with an uncertain political climate, the European Central Bank may have to go further than expected in cutting its key rates, with the terminal rate now expected to be around 1.5% to 1.75% by July 2025.
China: growth under pressure and recovery unconvincing
China's official 5% growth target seems hard to achieve, in the absence of sufficiently strong and targeted stimulus measures. The Chinese government has announced new tax incentives, but their implementation remains unclear. Investor confidence remains fragile, and the Chinese economy is struggling to regain its role as a catalyst for global growth.
Europe: structural rise in military spending and budgetary trade-offs
The budgetary trajectory of European countries is impacted by the surge in defense spending, which has accelerated significantly since the invasion of Ukraine. In 2024, the NATO target of 2% of GDP was reached for the first time, and this trend is set to continue. It remains to be seen how this spending will be financed, within a framework constrained by European budgetary rules. A relaxation of these norms may be necessary to meet these new strategic imperatives.
To read the full report, click here
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