Pictet Group
Outlook 2025
US economy is strong, supported by cyclical and structural factors and a Federal Reserve in easing mode. Solid growth is expected despite a slowdown. Europe and China face manufacturing and economic challenges, with Europe also dealing with political uncertainty.
An investment approach for a divided world
As 2024 draws to a close, the world is on the cusp of a new era. The US economy is in a healthy position, supported by cyclical and structural tailwinds and a Federal Reserve in easing mode. Although we expect a slowdown in the US, our base case is for growth to remain solid. A recession appears unlikely. Europe and China, by contrast, face headwinds as they grind through their respective manufacturing and domestic economic woes, compounded in Europe’s case by political uncertainty in its core. An America First policy in the US could exacerbate the divergence, giving a boost –at least in the short term– to US growth, while trade tariffs hit Europe and China. At the same time, the Republicans’ slim majority in the House of Representatives might result in a more conservative fiscal stance, as lawmakers rein in more radical tax proposals.
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An unexpected outcome?
There may yet be an unexpected outcome. Positive surprises are entirely possible, for example if peace were to materialize in Ukraine and the euro area proves more politically stable, with German elections in February one potential catalyst for a reset.
Should US policies have a more limited impact on the deficit than expected, US Treasuries may become more appealing. At the same time, a negative and radical outcome could unfold in the case of, for example, a trade war, with a consequential hit to global growth.
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Investment implications
Our core positioning is crucial for portfolio resilience and is set to seize on the opportunities we expect our base case scenario willpresent. Our strong convictions around specific markets and segments should enable investors to generate additional value. Moreover, retaining some flexibility would give investors scope to be flexible and react to unexpected surprises, be they positive or negative.
Outlook by region
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Clients come to Pictet for the attention, time, and expertise our teams give them. They appreciate the difference it makes to work with an independent firm aligned around their interests, with no pressures from external shareholders.