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Global economy 2025: from uncertainty to recovery

Insights from Nikolaj Schmidt, Chief Global Economist, T. Rowe Price, on the future of global markets

Nikolaj Schmidt, Chief International Economist, T. Rowe Price
Nikolaj Schmidt, Chief International Economist, T. Rowe Price
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In 2025, the global economy will face an initial slowdown, but forecasts point to signs of a gradual recovery, driven by accommodative monetary policies and structural shifts in key industries.

Challenges for the global economy

After years of restrictive monetary policies, 2025 begins under the weight of the effects of interest rate hikes and the gradual reduction of fiscal support. In China, despite recent economic stimuli, the macroeconomic outlook remains uncertain, affecting regions unevenly: Europe appears particularly vulnerable due to its reliance on manufacturing exports.

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However, the European Central Bank is well-positioned to quickly ease monetary policy. Such action could yield tangible benefits, especially if coupled with improved geopolitical conditions, such as a de-escalation of the conflict between Russia and Ukraine.

Key drivers of recovery

The year 2025 will mark a shift toward manufacturing-driven growth, underpinned by three main factors:

  1. Pent-up demand for interest rate-sensitive goods.
  2. Infrastructure investments, spurred by the global energy transition and the rise of generative artificial intelligence.
  3. Reorganization of production chains into economically and politically stable regions.

These trends will demand substantial capital inflows, favoring sectors such as energy, materials, and industrial infrastructure, which are expected to attract significant investments in the second half of the year.

Economic recovery and regional outlook

While the recovery will be visible across regions, its effects will be uneven: the United States may show greater resilience compared to Europe, while emerging markets will benefit from a more favorable domestic growth context. This global rebound will reflect a gradual shift from services to manufacturing, accompanied by renewed confidence in investments a

Conclusion

Nikolaj Schmidt’s analysis paints a picture of opportunities for 2025, despite initial challenges. The ability of central banks to adapt quickly and the growing focus on key sectors like renewable energy will be crucial in driving recovery.

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