Overview of Conditions
Updated 7 February 2025: As we enter 2025, the global economic landscape is shaped by evolving monetary policies and significant political developments. The International Monetary Fund's January 2025 World Economic Outlook update projects global GDP growth to stabilize at 3.3% in both 2025 and 2026, reflecting a balance between an upward revision for the United States and downward adjustments for other major economies.
The return of Donald Trump to the US presidency introduces heightened trade uncertainty, with proposed protectionist measures potentially disrupting global supply chains and straining relations with key partners, including Europe and China. The IMF cautions that such policies could increase inflationary pressures, complicating monetary policy decisions. In response to these challenges, central banks are adopting divergent approaches. The European Central Bank reduced its deposit rate to 2.75% to stimulate Eurozone growth, while the US Federal Reserve maintains it to 4.25%-4.5%, signalling a cautious stance amid persistent inflation. China continues to ease its monetary policy, reducing rates to 3.1% to address structural challenges and soft demand.
Financial markets reflect these dynamics, with the US and UK leading due to strong corporate performance, while Europe and China face stagnation and decline amid ongoing uncertainties. These developments set the stage for 2025 as a year of cautious economic optimism, tempered by uneven recovery and the ongoing realignment of global trade and investment patterns.
See below for more detail on current global business conditions.
Financial Conditions
In this section, we examine interest rates, inflation, and stock market performance in the Eurozone, UK, US and China using data from the European Central Bank, Federal Reserve, Bank of England and the Peoples Bank of China; and stock market performance using data from The Euro Stoxx 50, S & P 500, FTSE 100, and CSI 300.
Interest Rates & Inflation
The bottom line:
Monetary policies reflect diverging approaches shaped by shifting geopolitical dynamics. In the US, the Federal Reserve held its key rate to
4.25 - 4.5%, reflecting a more cautious stance. Chair Jerome Powell has signalled a limited path for further cuts as inflation remains sticky and political pressures mount. The Eurozone lowered rates to 2.75%, while struggling with weak industrial output and external pressures, particularly potential tariffs on European goods under the new US administration. The UK, lowered its rate to 4.5%, but continues to face concerns over stagnant growth. Meanwhile, China’s steady rate of 3.1% reflects concerns over slowing domestic demand and rising geopolitical tension with the US, which could further disrupt trade flows.
Recent data reveal diverging inflation trends amid shifting dynamics. The Eurozone’s inflation dipped to 2.43%, supported by the ECB’s interest rate cuts, while the UK’s inflation rose to 3.4%, reflecting persistent pressures. In the US, inflation moderated to 2.89% following Federal Reserve cuts to 4.25%-4.50%, balancing growth and price stability. Meanwhile, China’s inflation held at 0.2%, signalling weak demand. These shifts underline regional disparities as central banks navigate inflation and geopolitical risks.
Source: Original Ibec Global chart based on the latest monetary policy reports by the European Central Bank, Bank of England, the Federal Reserve, and the People’s Bank of China.
Interest Rates (as of February 2025)
Source: Ibec Global original chart based on the Consumer Price Index Summary of the US Bureau of Labor Statistics; Eurostat; UK’s Office for National Statistics; China National Bureau of Statistics, Consumer Price Index.
Financial Markets
The bottom line:
Currently US and UK markets outpace global peers due to economic resilience and favourable sectoral dynamics. The S&P 500’s rise to 6,118.71 reflects strong corporate earnings, particularly in technology and services, coupled with stabilizing monetary policy that reassures investors.
Similarly, the FTSE 100’s record 8,565.2 is driven by energy and commodity sectors, benefiting from high global demand and geopolitical disruptions that have elevated prices, especially in oil and gas. The Euro Stoxx 50’s increase to 5,217.5 reflects a slight recovery but limited by weak growth and structural challenges in the Eurozone, including sluggish industrial output and uncertainties around energy policy.
Meanwhile, the CSI 300’s decline to 3,803.74 points to waning investor confidence in China, as weak domestic consumption, demographic pressures, and strained US-China relations suppress market sentiment. These shifts highlight how geopolitics and structural factors drive market divergence, with advanced economies attracting capital, while China struggles to regain momentum.
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Source: Ibec Global original chart based on the stock prices of Euro Stoxx 50, FTSE 100, S&P 500 and CSI 300.
CEO Sentiment & Outlook
In this section, we analyse CEO sentiment and outlook by aggregating multiple globally-renowned sources including from KPMG, EY and PwC and Deloitte & Fortune.
The bottom line:
The latest CEO surveys reveal a cautious yet strategic approach to navigating 2025’s economic complexities. CEOs express measured optimism, balancing opportunities in technology adoption and sustainability with persistent macroeconomic and geopolitical challenges. Generative AI emerges as a central focus, with leaders prioritizing ethical integration and workforce reskilling to drive efficiency gains and competitiveness. However, expectations for AI to significantly boost revenue remain tempered, highlighting varied levels of readiness and strategic alignment across industries.
Sustainability has solidified its role as a core element of business strategy, with ESG efforts aligning closely with digital transformation goals. Yet, progress is uneven, and stakeholder pressure for measurable impact continues to grow. Meanwhile, geopolitical risks—including inflation, trade protectionism, and political instability—dominate the external agenda, pushing CEOs to focus on resilience and adaptability. Overall, 2025 is set to be a year defined by strategic pivots, where success will depend on leveraging technology, advancing sustainability, and navigating external volatility with agility and foresight.
Overall Sentiment
KPMG
74%
of global CEOs express confidence in the global economy over the next 3 years, reflecting improved sentiment from 2023 (73%).
EY
67%
of CEOs expect revenue growth, but 33% foresee challenges ahead due to macroeconomic volatility.
PwC
52%
of CEOs expect revenue growth, with focus shifting to resilience rather than expansion.
Deloitte & Fortune
35%
of CEOs are optimistic about the global economy, marking an increase from 27% in late 2023.
Key highlight
KPMG
79%
of CEOs believe tightening monetary policies and persistent cost-of-living pressures will challenge organizational growth, yet 82% aim to sustain long-term investments in talent and technology.
EY
92%
of CEOs place digital transformation as the cornerstone of their 2024 agenda, focusing on AI and workforce upskilling.
PwC
49%
of CEOs worry their organizations may not remain viable in 10 years unless immediate structural changes are made.
Deloitte & Fortune
nearly 60%
of CEOs believe the US Federal Reserve will cut interest rates by the end of the third quarter, though lingering uncertainty over geopolitical risks persists.
Sustainability
KPMG
72%
of global CEOs have embedded
ESG into their strategies, but 65%
express concern over stakeholder scrutiny and pressure to deliver measurable outcomes.
EY
CEOs emphasize alignment of ESG initiatives with digital transformation strategies to meet stakeholder demands.
PwC
68%
of CEOs report decarbonization progress, with energy efficiency leading the way.
Deloitte & Fortune
Sustainability prioritization slows as geopolitical instability diverts resources, though 55% of CEOs continue advancing key ESG goals.
KPMG
83%
of CEOs view Generative AI as critical to long-term competitiveness, but concerns about ethical use persist.
EY
78%
of CEOs are investing heavily in AI to boost efficiencies, though 64% worry about limited impact on revenue.
PwC
70%
of CEOs see AI as a double-edged sword—improving efficiency but creating workforce reskilling challenges.
Deloitte & Fortune
68%
cite generative AI as a tool to drive cost efficiencies and innovation, with a focus on insights and agility.
Top Concern
KPMG
81%
of CEOs cite geopolitical instability as their primary external disruptor, while inflation and energy transition remain key risks.
EY
77%
worry about political instability and its impact on economic conditions, especially in key markets.
PwC
28%
of CEOs see inflation as their top concern, while macroeconomic volatility (26%), and geopolitical conflict (22%) also remain as significant concerns for CEOs.
Deloitte & Fortune
62%
put geopolitical instability as the top external business disruptor, with CEOs focusing on building operational resilience against external shocks.
Source: Original Ibec Global based on the results of KPMG 2024 CEO Outlook; EY January 2025 CEO Outlook; PwC 28th Annual Global CEO Survey; Fortune/Deloitte Fall 2024 CEO Survey Insights.
Global Economy
In this section, we examine GDP growth forecasts for the EU, UK, US and China using data from the OECD, IMF, World Bank and FDI flows using data from OECD and UNCTAD.
GDP Growth
Source: Original Ibec Global chart based on the data from: International Monetary Fund. (December 2024). OECD Economic Outlook, Volume 2024 Issue 2: Preliminary version, World Bank. 2024. Global Economic Prospects, January 2025..
The bottom line:
Global GDP growth is projected to remain steady at 3.3% in 2025, as reported in the IMF's January 2025 World Economic Outlook. This stability is underpinned by easing inflation and stabilizing incomes.
The US economy is anticipated to grow by 2.7%, reflecting robust domestic demand. In contrast, the Eurozone's growth is forecasted at 1%, constrained by structural challenges such as subdued investment and trade fragmentation. China's growth is expected to slow to 4.6%, indicating weakening domestic consumption and the effects of geopolitical tensions, including US-China strategic rivalry.
These trends highlight persistent regional disparities, with the US maintaining steady momentum while Europe and China face structural and geopolitical headwinds. Global trade shows modest recovery, but the outlook remains shaped by economic rebalancing and heightened uncertainty in a fragmented world economy.
FDI flows
The bottom line:
As of early 2025, FDI trends reveal a strategic realignment toward stability and growth. The US consolidates its lead as the top FDI destination, driven by economic resilience, regulatory stability, and innovation-led sectors like technology. In contrast, Europe struggles with subdued inflows, hindered by regulatory hurdles and weak recovery, while restrictive investment policies further erode its competitiveness.
China’s declining FDI highlights structural inefficiencies and geopolitical tensions, with the US-China rivalry pushing investors to diversify into emerging Asian markets like Vietnam and Indonesia. These shifts underscore a prioritization of markets offering predictable regulatory environments, supply chain resilience, and innovation, reinforcing the US and Southeast Asia’s growing dominance in global capital flows.
Source: Original Ibec Global chart based on OECD data
Source: Original Ibec Global chart based on OECD data
Source: Original Ibec Global chart based on UNCTAD data.
Source: Original Ibec Global chart based on UNCTAD data.
Labour Market
In this section, we examine unemployment rates in the Eurozone, UK, US and China using data from the US Bureau of Labour Statistics, Eurostat, UK's Office for National Statistics and the National Bureau of Statistics in China.
Unemployment Rates
Source: Ibec Global original chart based on the data from the US Bureau of Labor Statistics; Eurostat; UK’s Office for National Statistics; National Bureau of Statistics of China.
The bottom line:
US unemployment remained at 4.1%, reflecting cooling labour demand.
The Eurozone’s improvement to 6.3% highlights sector-specific gains, though broader recovery remains slow.
China’s steady 5.1% urban unemployment points to stable labour conditions, while the UK’s unchanged 4.4% reflects ongoing stagnation.
These trends signal cautious stability amid varied economic challenges.
Productivity
The bottom line:
As of January 2025, productivity trends continue to show notable divergence. The US remains the global leader, with output per hour worked rising to 81.8 USD, driven by advances in automation and sustained investment in workforce skills. The Eurozone improved to 71.32 USD, reflecting modest gains but still constrained by structural inefficiencies and uneven progress among member states.
In the UK, productivity grew slightly to 69.49 USD, underscoring persistent stagnation tied to limited investment and economic uncertainty. Meanwhile, China’s increase to 19.77 USD highlights incremental progress fuelled by industrial upgrades, though structural challenges like an aging workforce and capital inefficiencies continue to weigh on long-term potential. These patterns underscore the uneven pace of global productivity growth, shaped by technological advancement and regional disparities.
Source: Ibec Global original chart based on the estimates from the International Labour Organization (ILO).
Trade
In this section, we examine the value of exports using data from the World Trade Organisation.
Exports
The bottom line:
The OECD's December 2024 updates predict annual global trade volume growth is projected to improve to 3.5% in 2024, and 3.6% in 2025. However, rising geopolitical and policy-driven risks remain a major concern. The return of Donald Trump has intensified trade uncertainty, as renewed tariffs on China and the EU threaten to disrupt supply chains, elevate production costs, and dampen global competitiveness.
Simultaneously, conflicts in the Middle East jeopardize energy markets and shipping routes, compounding existing pressures on global trade flows. While Asia remains the primary engine of export growth, particularly in electronics and manufacturing, Europe’s keeps fighting structural challenges and vulnerability to trade policy shifts. Mexico’s growing role, bolstered by nearshoring and US trade ties, exemplifies how strategic positioning can offset global fragmentation. These dynamics signal an increasingly polarized trade landscape, shaped by geopolitical rivalry and structural realignment.
Source: Ibec Global original chart based on the data from the April 2024 WTO Global Trade Outlook and Statistics.