Global economy takes wait-and-see attitude - Amundi 

ArmInfo. Although the US presidential elections are already behind us, it is still impossible to make reasonable assumptions about the developments in the global economy, since there is an element of uncertainty regarding the  practical steps of the 47th President of the United States, Donald  Trump. This was stated by the head of macropolitics research at the  Amundi Investment Institute Didier Borowski at the Amundi. Investment  Forecast 2025 conference in Yerevan, presenting the global themes of  the current year and key bright spots that can help investors  overcome the existing problems.

Trump and the global economy

According to Didier Borovsky, 2024 was characterized by uncertainty  due to the upcoming presidential elections in a number of countries.  Having left the US elections behind, in 2025 we continue to live in  conditions of uncertainty, but this time related to economic policy.  "We know who the US president is, but we do not know what steps he  will take in practice," he adds.

At the end of 2024, the US recorded GDP growth of 3%, which,  according to him, positively surprised experts, since a year and a  half ago many expected a recession in the American economy.

According to Borowsky, the US economy will not "go off the rails"  during the presidency of President Trump, but over the next 12-18  months, GDP growth may slow down and approach its potential. "We  believe that the current growth rates in the US cannot be  sustainable, since potential growth is close to 2%.  We expect the US  business cycle to return to this level in the next 12 months. Growth  of 1.9% is expected this year," he notes.

Meanwhile, economic development in the countries of the united  Europe, where growth was talked about a year ago, is disappointing.  In particular, Germany, which, by the way, is the largest economy in  the EU, has been in recession for the second year in a row. The  parliamentary elections expected at the end of February and certain  conceptual changes, revision of fiscal policy may become a turning  point for this country.  <Potential growth in Europe is much lower  than in the US, but not as low as in the last 2 years. We believe  that if real wages grow, the state of domestic economies should  improve to some extent. By the end of this year, we expect weak  growth rates in the region of 0.7%," the expert notes, adding that  the growth potential in the EU is about 1%.

The Institute's analysts estimate India's potential GDP growth in the  coming years at approximately 6%, while in China the figure is  declining and approaching 3%.

"Thus, the global economy's growth will be 3%, which is not a very  high figure - it is inferior to the figures of the last 20 years", -  the expert notes. At the same time, he emphasized, it is necessary to  realize that the global economy has proven its sustainability in  recent years. Accordingly, for the current year, "Amundi" predicts  global growth of 3% with a 6% potential.

How will inflation manifest itself?

All of Donald Trump's actions may at some point lead to inflation in  the US. For example, the deportation of immigrants he promised may  affect the labor market, lead to wage growth, and therefore to  inflation in the consumer market. <Consumers will have to endure  higher prices if he fulfills what he promised during the election  campaign>, he adds.

At the same time, the actions of the US president are unlikely to  lead to inflation in the EU, so there is no need to revise the policy  in the eurozone at the moment. <We believe that this year the  European Central Bank will continue its policy of lowering interest  rates>, says Didier Borowski.

Thus, despite the still existing inflationary pressure, the picture  at the global level indicates that it has already reached its peak  and is now moving down. According to the expert's forecast, in the  near future it will be possible to keep inflation within 2-3%.  <However, in the new world, inflation fluctuations will be higher,  which will complicate the work of central banks>, - he notes.

Reaction of central banks

<At the moment, the US Federal Reserve is still in the "wait and see"  mode, as are we, - Borovsky notes.  According to him, this is the  most rational decision from the point of view of the central bank. In  any case, according to the representative of "Amundi", one should not  expect a sharp reduction in interest rates from central banks, as was  the case before, in the 2010s. <The world will not return to the era  of low interest rates>, - he adds.

<Tariff Realities>

According to Borowski, Trump's second term will not be marked by  radical changes; he will act more cautiously. As for tariff policy,  no radical shifts are expected either - the process will be gradual  and will not apply to all countries, since the White House is aware  that this could be a shock to the US economy.

Thus, the authorities of China, which has the second-largest economy  in the world by nominal GDP, are expected to announce fiscal stimulus  only by the end of the first quarter. <They are also in the "wait and  see" mode, because they do not know exactly what decision Trump will  make regarding tariffs - the fiscal stimulus in China will depend on  the shock, the consequences of which they will have to overcome. One  thing is clear: they will act in such a way as to avoid a strong  economic shock as a result of tariff policy, in connection with  which, in the case of China, a gradual slowdown in economic growth is  predicted>, - he notes.

Growing public debt as an indicator

The expert reminds that the main source of growth in the US economy  is public debt. <The US economy is in uncharted territory - for the  first time in its history, an economy operating at full employment  has a large deficit. Usually, when you are at full employment, your  deficit starts to decline and your debt is under control. They are  not using this opportunity - strong economic growth - to adjust their  fiscal situation. In practice, this means that in the coming years  the US economy will face a recession, which will inevitably lead to  an increase in the deficit>, - he notes.

<Fiscal space has narrowed everywhere, almost all countries are  recording an increase in public debt, and in this case, their ability  to overcome shocks is further reduced. This can lead to macro  volatility, an increase in the price of debt securities>, - says  Didier Borowski.

The Future of the Dollar

According to the representative of <Amundi>, although the US dollar  continues to be a <safe haven> for many people, experts do not think  that it will maintain its position throughout the year. <We expect  that at some point the dollar will devalue>, - he notes.

<Pessimism> has no place here

An interesting development is taking place in the capital markets,  which is affecting the indicators, the expert notes. According to  Borovsky, the <miraculous seven> is no longer the driving force - the  US capital market sector now provides opportunities for investors.  Taxes are lower here, which will benefit all companies, including  small and medium ones. Accordingly, the S&P 500 indicators are now  much higher than last year.

<We should not be too pessimistic about Europe>, - the expert urges.  Yes, there are structural weaknesses, yes, productivity, domestic  consumption and investment are low, and although the figures show  that growth will be very weak at the beginning of the year, the  eurozone has huge opportunities that can be mobilized.

<In the coming months, fiscal clarity will increase in the eurozone,  and at some point - in mid-2026, there will be a cyclical recovery  and a return to potential growth levels. In any case, here and  everywhere <pessimism> is not the best assistant, the right hedging  will be more effective>, - concludes Didier Borowski, head of macro  policy research at the Amundi Investment Institute.