2025全球經(jīng)濟(jì)展望報(bào)告

THINKEconomicandFinancialAnalysis

INGGlobalOutlook

December2024

Economics,actually.

Our2025hitlist

/THINK

INGGlobalOutlookDecember2024

2

Economics,actually:Our2025hitlist

‘Love,Actually’remainsafirmfestivefilm,butitsthemesandcoremessagenow

appeardatedand,attimes,alittleshocking.AsDonaldTrumppreparestore-enter

theWhiteHouse,Europecontinuestostrugglewithstagnation,andconflictcontinuestorage,Iarguethat,abitlikethemovie,globaleconomiesreallyneedtomoveon

Overthelastfiveyears,everysingleyearhasbroughtenougheconomicandpoliticalactionyouusedtoseeinadecade.2024wasnodifferent.Wehadarecordnumberofelectionswherewe'reseeingtheriseofpopulism,centralbanksu-turnedandslashedrates,andweeconomistsweregivenasharpreminderthatthereare,indeed,both

cyclicalandstructuralelementstogrowth.

Welearntalottoo.InChina,thecorrectionofarealestatebubblereallydoestake

years,notmonths.IntheUS,inflationcancomedownbutcostscanremainhigh.Andthoselivingcostscandecideelections,notGDPgrowthorthespeedofjobcreation.It'snolonger'theeconomy,stupid',but'inflation,stupid'.

Here'sanotherlearning:it'sallverywellforcentralbankerstopatthemselvesonthebackformanagingasoftlandingwithratehikes,butmygoodness,welearntthat

they'restillfarawayfromordinarypeople'slives.And,hey,Europe!Didyouforgetthat

agradualweakeningofcompetitivenesswilltakeitstollontheeconomy?I'mparticularlylookingatyou,Germany.

TheheadydaysoftheOlympics,whichapparentlyintheeurozonealwaystendtoendwithapublicfinancebang-firstinGreece,nowinFrance-seemanawfullylongtimeago.So,whatdowehavetolookforwardtonextyear?

ItjustsohappensIwasrewatchingthatChristmasfavourite,'Love,Actually',overtheweekend.Iknow,I'masoftieatheart.Anditstarteddawningonmethatthissweetbutnowstrangelydatedmovieclassicmayhavemorethanoneparallelwiththeeconomicworldrightnow.

Wehavetheoldrockstarmakinganunexpectedbutstellarcomeback.Willhestillbefillingthestadiumsnextyearwithhistariffsong,orwillhebeholedupwithhisbestmateinfrontoftheTV?

There'sMarkwithhissecretloveforhisbestfriend'swife.MightthatbeEuropeonthedoorstepoftheWhiteHousenextyear,beggingforsomeattentionandpleading

againstatradewar?

OrperhapsMrTrumphimself,anunlikelyHughGrant,willhavetostartadoor-to-doorsearchforhisEuropeanpartnersasherealisesthatonlyastrongTransatlantic

relationshipcantrulymakeAmericagreatagain.

HowaboutEuropeansandAmericansmakinggreatfriendshipslikeColinFrisselldid

whenhemetthosethreeAmericanwomen?OrEuropeanconsumersspendingtheir

wayoutofstagnationasAlanRickman’sHarrydidwhensplurgingonanecklaceforhissecretary?

‘Love,Actually’isamovieofhopeandunfulfilledwishes,ofrisk-takingbutalso

complacencyand,aboveall,afilmofsometimescompletelyunrealisticstories.ThisiswhereitreflectsourMacroOutlookfor2025.Withourthreecalls,wepresentoursafebet,ourriskiercallsandsomebolderones,notunlikethemovie.

INGGlobalOutlookDecember2024

3

But‘Love,Actually’isofitstime;ithasn'tagedtoowell.We'renotlikelytoseethiskindofold-genreromanticcomedyincinemasin2025.Ourgloballeaders,however,still

seemintentonpushingontousnextyearthosesametriedandtestedthemeswithwhichwe'vebecomesofamiliar:tariffs,tradewars,isolationism,kickingthecan...

Ithinkwedeservebetter,actually.

carsten.brzeski@ing.de

INGGlobalOutlookDecember2024

4

INGglobalforecasts

2024

2025F

2026F

1Q24

2Q24

3Q24

4Q24F

2024F

1Q25F

2Q25F

3Q25F

4Q25F

2025F

1Q26F

2Q26F

3Q26F

4Q26F2026F

UnitedStates

GDP(%QoQ,ann)

1.6

3.0

2.8

2.7

2.8

1.7

1.3

1.6

1.7

2.0

1.8

1.8

1.5

1.4

1.7

CPIheadline(%YoY,aop)

3.2

3.2

2.6

2.6

2.9

2.2

2.1

2.6

2.7

2.4

3.0

3.3

3.0

2.7

3.0

Federalfunds(%,eop)

5.50

5.50

5.00

4.50

4.50

4.25

4.00

3.75

3.75

3.75

3.75

3.75

3.75

3.75

3.75

3-monthSOFRrate(%,eop)

5.40

5.40

5.00

4.40

4.40

4.20

3.90

3.75

3.75

3.75

3.75

3.75

3.75

3.75

3.75

10-yearinterestrate(%,eop)

4.25

4.40

3.80

4.25

4.25

4.25

4.75

5.00

5.50

5.50

5.00

5.00

5.00

5.00

5.00

Fiscalbalance(%ofGDP)

-7

-6.7

-6.4

Grosspublicdebt/GDP

98.7

101.3

103.2

Eurozone

GDP(%QoQ,ann)

1.2

0.7

1.5

-0.1

0.7

0.1

0.8

1.2

1.3

0.7

1.3

1.3

1.3

1.3

1.3

CPIheadline(%YoY,aop)

2.6

2.5

2.2

2.3

2.4

2.4

2.1

2.2

2.2

2.2

2.2

2.2

2.2

2.2

2.2

ECBDepositRate(%,eop)

4.00

3.75

3.50

3.00

3.00

2.50

1.75

1.75

1.75

1.75

1.75

1.75

1.75

1.75

1.75

3-monthinterestrate(%,eop)

3.90

3.70

3.25

2.85

2.85

2.40

1.70

1.75

1.80

1.80

1.80

1.80

1.90

1.90

1.90

10-yearinterestrate(%,eop)

2.30

2.60

2.10

2.10

2.10

2.10

2.30

2.40

2.60

2.60

2.60

2.60

2.70

2.70

2.70

Fiscalbalance(%ofGDP)

-3.1

-2.8

-2.7

Grosspublicdebt/GDP

88.8

89.3

89.5

Japan

GDP(%QoQ,ann)

-2.4

2.9

1.2

2.4

-0.2

0.8

0.8

0.8

1.2

1.3

1.2

1.2

1.2

1.2

1.2

CPIheadline(%YoY,aop)

2.5

2.7

2.8

2.6

2.6

2.5

2.2

1.7

1.7

2.0

2.2

2.0

2.0

1.8

2.0

Targetrate

0.10

0.10

0.25

0.50

0.50

0.50

0.75

0.75

1.00

1.00

1.00

1.00

1.00

1.00

1.00

3-monthinterestrate(%,eop)

0.26

0.30

0.43

0.50

0.50

0.70

0.90

0.90

1.20

1.20

1.20

1.20

1.20

1.20

1.20

10-yearinterestrate(%,eop)

0.73

1.06

0.86

1.00

1.00

1.00

1.25

1.25

1.50

1.50

1.75

1.75

1.75

1.75

1.75

Fiscalbalance(%ofGDP)

-7

-7

-7

Grosspublicdebt/GDP

245

250

250

China

GDP(%YoY)

5.3

4.7

4.6

4.8

4.8

4.5

4.9

4.5

4.4

4.6

4.1

4.3

4.1

4.2

4.2

CPIheadline(%YoY,aop)

0.0

0.3

0.5

0.7

0.4

0.6

0.6

0.8

1.6

0.9

1.8

1.4

1.6

1.6

1.6

7-dayReverseRepoRate(%eop)

1.80

1.80

1.50

1.50

1.50

1.40

1.40

1.30

1.20

1.20

1.20

1.10

1.00

1.00

1.00

3MSHIBOR(%eop)

2.16

1.92

1.84

1.85

1.85

1.75

1.75

1.70

1.65

1.65

1.60

1.55

1.50

1.50

1.50

10-yearT-bondyield(%,eop)

2.30

2.21

2.20

2.00

2.00

2.00

2.00

1.95

1.90

1.90

1.90

1.90

1.85

1.85

1.85

Fiscalbalance(%ofGDP)

-5.0

-5.50

-5.5

Publicdebt(%ofGDP),incl.localgovt

121

135

145

UnitedKingdom

GDP(%QoQ,ann)

2.8

1.8

0.6

0.9

0.9

1.3

2.0

2.0

1.5

1.4

1.3

1.3

1.3

1.3

1.4

CPIheadline(%YoY,aop)

3.5

2.1

2.0

2.6

2.6

2.6

2.4

2.7

2.5

2.5

2.4

2.2

2.2

2.2

2.3

BoEofficialbankrate(%,eop)

5.25

5.25

5.00

4.75

4.75

4.25

3.75

3.25

3.25

3.25

3.25

3.25

3.25

3.25

3.25

3-monthinterestrate(%,eop)

5.25

5.05

4.80

4.55

4.55

4.05

3.55

3.20

3.20

3.20

3.20

3.20

3.20

3.20

3.20

10-yearinterestrate(%,eop)

3.95

4.20

4.00

4.25

4.25

4.10

4.00

4.10

4.25

4.25

4.00

4.00

4.00

4.00

4.00

Fiscalbalance(%ofGDP)

4.5

3.6

3.4

Publicsectornetdebt(FY,%)

100.1

99.7

100.1

EUR/USD(eop)

1.08

1.08

1.12

1.05

1.05

1.04

1.04

1.04

1.02

1.02

1.01

1.02

1.03

1.05

1.05

USD/JPY(eop)

151

160

143

155

155

155

157

158

160

160

158

155

153

150

150

USD/CNY(eop)

7.22

7.26

7.01

7.25

7.25

7.20

7.25

7.25

7.35

7.35

7.50

7.45

7.40

7.40

7.40

EUR/GBP(eop)

0.86

0.87

0.84

0.83

0.83

0.83

0.83

0.82

0.82

0.82

0.82

0.83

0.83

0.84

0.84

ICEBrent-US$/bbl(average)

82

85

79

74

80

73

70

68

65

69

67

69

73

70

70

DutchTTF-EUR/MWh(average)

28

32

36

40

34

40

32

29

30

33

32

25

23

30

28

Source:INGforecasts

5

Theworldrightnow

FromtheUStoEurope,FXtorates,thisiswheretheworldisatasweapproach2025

CarstenBrzeski

GlobalHeadofMacroandChief

Economist,Eurozone,Germany,Austriacarsten.brzeski@ing.de

JamesKnightley

ChiefInternationalEconomist,Americasjames.knightley@

PeterVandenHoute

ChiefEconomist,Belgium,Luxembourg,Eurozone

peter.vandenhoute@

JamesSmith

Economist,DevelopedMarketsjames.smith@

LynnSong

ChiefEconomist,GreaterChinalynn.song@

DeepaliBhargava

RegionalHeadofResearch,Asia-Pacificdeepali.bhargava@

WarrenPatterson

HeadofCommoditiesStrategywarren.patterson@

UnitedStates

DonaldTrumphasbeenquicktonamehiscabinetpicksashelookstodeliveronhiskeyelectionpromisesoftaxcuts,immigrationcontrols,tariffstoincentivisere-shoringandcost-cuttingefficiencysavingstoreininthedeficit.

Taxcutsandimmigrationrestrictionsaretheeasiesttomakeearlyprogresson,while

thespeedandscaleoftariffhikesremainopenfordebate.Thatsaid,itisassumedChinaandMexicowillfeeltheheatfirst,potentiallywithindaysofTrump’sinauguration.TherewillbenowinnersfromthiswithUSconsumersandexporterspayingahighprice.ThereremainssignificantscepticismoverhowdeeplyElonMuskandVivekRamaswamy,co-headsoftheDepartmentofGovernmentEfficiency,willbeabletomakethespendingcutsrequiredtobringtheUSfiscalpositionundercontrol.

TheFederalReservehasbeenswifttoacknowledgethattheymaynotneedtocut

interestratesasquicklyorasfaraspreviouslythought.Theprospectofslightlystrongernear-termgrowthaselectionclaritypromptssomebusinessestoputmoneytoworkissetbesidetheriskoflingeringtariff-inducedinflation.Consequently,theDecember

FOMCoutcomeisacointoss.WestillfavouraDecembermovewithaJanuarypause,butitcouldturnouttobetheotherwayaround.

Eurozone

ThenewlyinstalledEuropeanCommissionwillrapidlybeconfrontedwithpotentialtradeinitiativesbythenewUSadministration,whileatthesametimehavingtolaunch

initiativestoputtherecommendationsoftheDraghiReportinpractice.Witha

constantlythreatenedminoritygovernmentinFranceandGermanelectionsinFebruarythepoliticalbackdropisnotidealtorelaunchtheeurozoneeconomy,whichhasallbutcometoastandstill.

ThePMIindicatorforboththemanufacturingandtheservicessectorfellbelowthe50boom-or-bustlevelinNovember,whiletheeconomicsentimentindicatorfromthe

INGGlobalOutlookDecember2024

6

EuropeanCommissionstabilizedatalowlevel.Atthesametimeinflationisrisingagainonthebackofadversebaseeffects.Wagegrowthcameouthigherthanexpectedinthethirdquarter,thoughthelatestwageagreementsinGermanysuggestsome

moderationisintheoffing.Whiletheinflationtrendisstilldown,somefactors,suchasrisingfoodprices,willmaketheoutlookmorevolatile.ThatislikelytokeeptheECBonagradualeasingpath.

UnitedKingdom

TheUKoutperformedmostofitsWesternEuropeanneighboursthroughthefirstthreequartersof2024.Admittedly,notallofthatcanbeeasilyexplainedbyunderlying

economicfundamentals,andmoreimportantly,momentumseemstobeslowing.Weexpectrelativelymodestfourth-quartergrowthbeforetherecentbudgetinjectssomefreshenergyinthenewyear.Departmentalbudgetsaregettingabigupliftinthe

remainderofthisand,indeed,thenextfinancialyear,muchofwhichwillendupin

publicsectorwages.Inflation,meanwhile,isprovingunhelpfullysticky.Theheadlinerateisupabove2%againandwillheadtowards3%beforetheyearisout,comingdown

againthrough2025.That’salldowntoenergy,butservicesinflationisprovingstickytoo.ThathelpsexplaintheBankofEngland’srelativecaution.

China

SincetheUSelection,therehavebeentwomaindevelopmentsinChina.Thefirstwasthelong-awaitedNationalPeople’sCongressmeeting,whereanRMB10tnfiscal

programmewasapproved.Spreadover3-5years,thisannouncementnowsetsthe

stageforwhattheMinistryofFinancecharacterisedasa“moreforceful”fiscalpolicy

stancein2025byreducinglocalgovernments’short-termdebtburden.Weexpectlocalgovernmentstorollouttheanticipatedpoliciestosupportconsumptionandpropertymarketsinthecomingmonths,withDecember’sCentralEconomicWorkConference

worthmonitoring.

TheseconddevelopmentwasasecondmonthofencouragingdatainOctober,asmostindicatorsstabilisedormovedalittlestronger.Datanowlooksencouragingforour4.8%YoYGDPforecast,whichshouldsatisfyChina’s'around5%'growthtarget.Wethinkas

longasdatacontinuestoholdup,policymakerswillshiftthebruntofupcomingstimulusto2025.

RestofAsia

DisinflationcontinuestobeathemeforAsia,withmedianheadlineCPIforAsiafallingto2.2%inthethirdquarterof2024from2.8%atthebeginningoftheyear.Coreinflationat2%isalsowithinmostcentralbanks’comfortzone.Monetarypolicydivergenceis

gettingmoreevident.WhilesomecountrieslikeKorea,ThailandandthePhilippines

wentaheadwiththeirratecutcycle,otherslikeIndonesiachosetopause,giventhe

highsensitivityoflocalcurrencytoarisingUSdollar.Theriskofare-escalationoftradewarshassentAsiaFXdownsincetheUSelections,withthelargestdeclineseenin

currenciesthataremoretrade-oriented,suchastheThaiBhat,theMalaysianringgit,theTaiwanesedollarandtheSingaporedollar.

WithinweeksofTrump’sre-election,U.S.DefenceSecretaryLloydAustinvisited

AustraliaandAsiawithacommitmenttostrengtheningcooperationpartnershipsacrosstheIndo-Pacific.ThevisittothePhilippineswasparticularlyrelevantasimprovingU.S.-Philippinedefencetieswillbecriticalinadvancingregionalsecuritythroughoutthe

region.

CentralandEasternEurope

Althoughtheglobalrate-cuttingcycleisonlyintheearlystages,it'satquitean

advancedstageintheCEEregion;it'snowacaseoffine-tuningforcentralbankers.

7

We'reseeingeconomicrecovery,butit'sslowerthanexpected.Thedisinflationprocesshasbasicallystalledandwe'reseeingsomenewinflationaryrisksinsomeplaces.

Poland'scentralbankisclosetorestartingthecuttingcyclenextMaywith100bpratecutsintotalasourbaseline.TheCzechNationalBankisconsideringpausingthecuttingcycleafterdelivering300bp,andanother100bpshouldcomemoreslowlynextyear.InHungary,theNBHshouldreturntoitscuttingcycleinthemiddleofnextyear,with75bpintotal.WeshouldalsoseemoreratecutsfromtheNationalBankofRomania,which

suspendeditscuttingcycleinOctober;it'sexpectedtoresumeinMaynextyearwith

75bpofcuts.

FX

TheFederalReserve'sbroadestmeasureofthetrade-weighteddollarhasrallied5%overthelasttwomonthsasmarketspositionedforandthenwitnessedaRepublicanclean

sweep.EuropeancurrencieshavebornethebruntofdollarstrengthasthemixtureofsofteurozonesurveydataandEurope’sfiscalstraitjackethaspressuredUS:Eurozoneinterestratespreadstothewidestlevelssince2022.

GeopoliticaldevelopmentshavehitEuropeancurrencies,too,asthewarinUkrainehasescalated.Investorsandcorporatesrememberonlytoowellthespikeinenergypricesin2022andthedamagethatdidtotheeurozone’stradesurplusandtheeuro.

FromtheUSsideoftheequation,theFXmarketisleaningtowardstheviewthat

President-electDonaldTrumpwillhitthegroundrunning.Thishasmeantverylittle

reprieveforanyglobalcurrencies,althoughthemorecommodity-linkedcurrenciesarefaringslightlybetteronthebackofsomefiscalstimulusoutofChina.

Rates

USmarketrateshitlocalhighsontheTrumpwin,butsincethenhavebeenonadriftlower.Adecentretracementisfittingfollowingthenear100bpmovetotheupsideforthe10yryield,amovethatwas,infact,sparkedbythefirstFedratecutinmid-

September.ButaswepushthroughDecember,we'rebacktobasicdatawatching.Totheextentthatthedatasoftens,there’sanexcusetotestlowerstillforyields.

Intheeurozone,therecentpulllowerinmarketratesisinsyncwithwideningmacro

malaiseandanECBthat’spreparedtokeepchippingawayatthedepositrate.Acurveflatteningimpulsehasmeanttheentirecurvehasbeenshiftinglower.Adominant

outcomeiswiderspreadsbetweenUSandeurozonemarketratesrightalongthecurve,athemethat’snotsettogoawayanytimesoon.

Commodities

Oilpricesremainrangebound,withBrenttradinginamostly$70-75/bblrangeoverNovember.TheoutcomeoftheUSelectionisnetbearishforoil,althoughweexpectlimitedadditionalupsideinUSoiloutputwithaTrumppresidency.USproducersaremorepricedependentandwiththebalanceexpectedtobeinsurplusnextyear,webelieveweakerpriceswillcapdrillingactivity.

OPEC+policyiscrucialfortheoilmarket.Thegroupagreedtoextendsupplycutsbyanothermonth.However,2025outputpolicyisstillunclear.Weassumethegroupwillgraduallyunwinditsadditionalvoluntarycutsnextyear.

Europeannaturalgaspriceshaverallied,withstoragedrawingquicklyatthestartof

winter.Alackofwindhasincreasedgasdemandfromthepowersector.Inaddition,

Russiansupplyriskslinger.TheAustrianenergycompanyOMVstoppedpayingGazpromforsuppliestorecoupdamagesitwasawardedinarbitration,whichsawGazpromhaltflowsunderthecontract.However,Russiansuppliescontinueunchanged,withRussia

sellingintothespotmarketinstead.ThemarketisbracingfortheendofRussiantransitflowsthroughUkraine,withthetransitdealsettoexpireattheendofthisyear.

8

Threecallsfortheglobaleconomy:Inflationwavesandinvestment

CarstenBrzeski

GlobalHeadofMacroandChiefEconomist,

Eurozone,Germany,Austriacarsten.brzeski@ing.de

demands

Manycentralbankershavedeclaredvictoryoverinflationthisyear,projectingrecenttrendsinto2025.We,though,aremorecautious

TouristslookontoLondon'sfinancialdistrict

1Call1:Investmentdivergence

Thelistofinvestmentneedsinmosteconomiesislongandgrowing;thinkabout

reindustrialisation,AI,renewinginfrastructure,greentechnologyanddefence.However,it’suncertainifnextyearwillseeasignificantglobalinvestmentboom.Instead,thereisahighriskofinvestmentdivergence.

AlthoughthespecificsofthenewUSeconomicpoliciesarestillunclear,pressureon

Americancompaniestorestorewillincrease,andforeigncompanieswillfeeltheneedtoincreasetheirUSpresence.Andallthatshouldboostinvestment.

TheneedforinvestmentintheeurozoneandChinaisalsohigh,butfiscalconstraints

andnewgeopoliticaluncertaintiescouldholdbackaspendingboom.Aneweraof

industrialpoliciesintheUScouldactuallycannibaliseinvestmentselsewhere,leadingtoinvestmentdivergence.

2Call2:Inflationwillcomeinshorterbutmorefrequentcycles

Manycentralbankershavealreadydeclaredvictoryoverinflationthisyear,projectingrecenttrendsinto2025.Weremainmorecautious.

Intheshortrun,cyclicaldisinflationshouldstillprevail,particularlyintheeurozone,astheturningofthelabourmarketwillfurtherdampenwagegrowth.However,thismightnotbethefullstoryfor2025.Infact,thereisahighchancethatinflationcouldcomebackwithavengeance.

Potentialtariffsaren’ttheonlyfactorthatcouldreigniteinflationthroughouttheyear.Investmentplansandinitiativescouldeasilyreintroducesupply-sideconstraintsin

manyeconomies,creatingnewinflationarypressures.Initially,theseinvestmentsmight

INGGlobalOutlookDecember2024

9

leadtohigherinflation,withthehopethattheywilleventuallyboostproductivityandreduceinflationarypressures.

3

Consequently,2025couldmarkthebeginningofastop-and-goinflationpattern,withshorterbutmorefrequentcycles,potentiallynecessitatingmoreactivemonetarypolicyoraprolonged,steadyapproachfromcentralbankers.

Ourboldcall:Yieldcurvecontrolasresultofhigherdebt

Debt-fundedinvestmentsintheWesternworldcouldeasilybringbackdebt

sustainabilityconcernsintheeurozoneandtheUS.Withmuchhigherinflationary

pressuresthaninthe2010s,centralbankscannotgoall-inwithhighlyaccommodativemonetarypoliciesacrosstheboard.Thelowerboundforinterestrateswillbehigherthistimearoundthaninthe2010s.

Still,asthelongerendofthecurveiscriticaltomortgageandcorporateborrowingcosts,whenpushcomestoshove,boththeFederalReserveandtheEuropeanCentralBank

couldbeforcedtotackleelevatedbondyields,tryingtosquaretheneedforinvestmentwithpricestability.ThiscouldleadtoanewdiscussiononyieldcurvecontrolsintheUSandtheeurozone,eventuallyforcingbothcentralbankstostartbuyinglonger-datedgovernmentdebtagain.TheECBalreadyhasaninstrumentforit:theTransmission

ProtectionInstrument(TPI).Theymighthavetouseitearlierthantheyhadeverthought.

10

Whatcouldgoright…orwrong…in2025

CarstenBrzeski

GlobalHeadofMacroandChief

Economist,Eurozone,Germany,Austriacarsten.brzeski@ing.de

Alookatthemajorrisksandopportunitiesfacingtheglobaleconomyamid

uncertaintyastojustwhatthenewUSpresidentwilldooncehetakesoffice.Therhetoricmaynotmatchupwithreality

JamesSmith

Economist,DevelopedMarketsjames.smith@

DonaldTrumpissettobeinauguratedasUSPresidenton20January

Theupsideanddownsideriskstoourglobaloutlook

Forecastingwhat'sgoingtohappenin2025isdoublydifficultrightnowbecausewe

reallydon'tknowforsurehowDonaldTrump'snewpresidencywillshapeglobalevents.Willtariffsbeassevereandwide-reachingasthreatened?WillMrTrump'spositionon

Ukraineevolvefromhiscampaign?ThesequestionswilldeterminenotonlythestrengthoftheUSeconomy,particularlyintotheendof2025,butalsothefateofEurope.

HowEuropeanpolicymakersrespondtotheUSadministration'sprotectionismisalsokey.Dotheyretaliate,anddoesitgalvaniseEuropeanleadersintosomejointfiscal

stimulus?AlothingesonChina,too,andthesuccessofitsrecentstimulusmeasuresinstabilisingsentimentandthepropertymarket.

Here'salistofthemajorrisksweseetotheglobaloutlookandhowthey'dlikelyplayoutacrosstheworldeconomyandfinancialmarkets.

INGGlobalOutlookDecember2024

11

Theupsideriskstoourglobaloutlook

Source:ING

Thedownsideriskstoourglobaloutlook

Source:ING

12

Centralbanksin2025:They’resingingadifferenttune

CarstenBrzeski

GlobalHeadofMacroandChief

Economist,Eurozone,Germany,Austriacarsten.brzeski@ing.de

Centralbankersareadjustingtheircalculationsyetagainasweapproach2025.So,fromNewYorktoTokyo,LondontoFrankfurt,we’realsoreassessingwhatwethinkthey’llbeuptonext

JamesKnightley

ChiefInternationalEconomist,Americasjames.knightley@

JamesSmith

Economist,DevelopedMarketsjames.smith@

MinJooKang

SeniorEconomist,SouthKoreaandJapanmin.joo.kang@

LynnSong

ChiefEconomist,GreaterChinalynn.song@

TheECB'sChristineLagardewillagainbecentre-stagenextyear

FederalReserve:Notsofar,notsofast

YoumaybeforgivenforquestioningwhytheFedhasalreadycutthepolicyrate75bp

despitetheeconomygrowingataratecloseto3%,aninflationrateabovetarget,

whereunemploymentremainsverylow,andequitymarketsandhousepricesareatall-timehighs.Therationalegoesthatthe2022/23ratehikingcyclewasthemostrapidandaggressiveforfortyyears,andtheperiodbetweenthelastratehikeandthefirstrate

cuthasbeenunusuallylongat14months-theaveragehasbeenaroundsixmonthsoverthepast50years.MonetarypolicyoperateswithlongandvariedlagsandtheFedwantsasoftlanding.Thefactthatithasadualmandateof2%inflationANDmaximumemploymentmeanstheyhavetosetmonetarypolicytooptimiseforboth.Inflationislookingbetterbehaved,andthisisallowingittoputmoreemphasisonthecoolingjobsdata.

Withthisinmind,theFedismovingpolicyfromrestrictiveterritorytoonethat'sslightlylooser.Theysuggestthatthelong-runexpectationfortheFedfundsisaround3%,andwiththeceilingratecurrentlyat4.75%,theyhaveroomtoplaywith.Assuch,wefavourthemcuttingratesagaininDecember,butapauseinJanuarylookslikely.BytheMarchFOMCmeeting,theFedwillhaveaclearerunderstandingofPresidentTrump'stariff,taxandspendingplans.Theprospectofdomestictaxcutssupportinggrowthwhiletariffs

pushupinflationcertainlyarguesforaslowerandmoregradualrate-cuttingpathnextyear.Welookfor25bpofcutsperquarterin2025withaterminalrateofaround3.75%inthethird.

EuropeanCentralBank:Goingbelowneutral

Havingbeenslowtoaddressrisinginflationandarguablylateinstoppingratehikeslastyear,theECBnowappearsdeterminedtogetaheadofthecurveandreturninterest

ratestoneutralasquicklyaspossible.Forthedoves,thisisano-brainer,andforthehawks,theargumentseemstobethatgettingratesbacktoneutralquicklycouldbe

INGGlobalOutlookDecember2024

13

enoughtoavoidanotherepisodeofunconventionalmonetarypolicywithquantitativeeasingandnegativeinterestratesfurtherdowntheline.

However,withmoredownsiderisksfortheeurozoneeconomyemergingandevenif

inflationarypressuresdonotdisappearentirely,weexpecttheECBtogobelowneutral.ThiswouldfollowtheECB’slineofargumentationsinceSeptemberthisyear,i.e.,puttingmoreemphasisontacklingthelackofgrowththansqueezingoutthelastinflationbits.Asaresult,weseethedepositrateat1.75%beforethesummer.

BankofJapan:Pursuingpolicynormalisation

TheBoJmarkedasignificantshiftinitsmonetarypolicyin2024.ItendeditsnegativeinterestratepolicyinMarchandraiseditstargetrateto0.25%inJuly,causing

considerablevolatility,especiallyintheFXmarket.Evenbeforeentering2025,theBoJisleavingopenthepossibilityofanotherratehikeasearlyasDecember.

Nextyear,asithasbeenthisyear,theBoJ’sratedecisionwillbeasurprisetothe

marketsandwillbealivedecisioneachtimearound.WecontinuetobelievethattheBoJcanraiseitstargetrateto1.0%bytheendof2025.Weexpectwage-driven

inflationarypressurestogrowandcorporateprofitstoimprove,whiletheweakJPYisariskfactorforinflationovershooting.TheBoJwillbewaryofexternalrisksandglobal

financialmarketjitters,sothepaceofnormalisationwillslowtowardstheendoftheyear.

BankofEngland:Gradualfornow,fastercutsinthespring

InsharpcontrasttotheECB,theBankofEnglandistakingratecutsverygradually.Therecentbudgetandalltheextragovernmentspendingthatcamewithitwillboost

growthin2025.Meanwhile,servicesinflation,theguidinglightforUKpolicy