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Uncertain and Risky Environment: The Global Economy in 2025 Through Didier Borowski’s Perspective
Yerevan, January 30, 2025
“We live in a new world where the level of uncertainty is higher than ever. However, it is precisely this uncertainty that opens up new opportunities,” said Didier Borowski, Head of Macro Policy Research at Amundi Investment Institute, as he started his speech at the Amundi Investment Outlook 2025 held in Yerevan on January 30. He presented insights into the global economic outlook for 2025.
Didier Borowski, an experienced analyst, forecasts that the coming year will be marked by diverging trends in economic growth and inflation, creating both challenges and unique opportunities for investors.
Economic Growth and Systemic Challenges
In recent years, the global economy has demonstrated significant resilience. “The performance of the U.S. economy, in particular, is remarkable,” Borowski noted. “Economic growth has reached nearly 3%, exceeding all forecasts.” According to him, this is especially noteworthy given the substantial tightening of monetary policy over the past 18 months.
In the context of global trends, Borowski highlighted the pivotal role of the United States in the global economy, which has become increasingly uncertain with the return of Donald Trump to the presidency. Therefore, he highlighted the possible impact of Trump’s proposed policies.
“Trump’s policy of mass deportation of illegal immigrants and the introduction of new tariffs could create significant inflationary pressures,” Borowski pointed out. “Restrictions in the labor market could lead to wage increases in certain sectors, while tariffs would mechanically raise consumer prices.”
He further notes that these policies are being proposed at a time when the U.S. economy is already operating at full employment. “When considering fiscal policy under conditions of full employment, inflationary risks are clearly upward-trending,” the expert observed, adding that the U.S. Federal Reserve is currently in a wait-and-see mode. In his forecast, the U.S. economy cannot sustain high growth rates for long, as its potential growth rate is around 2%.
Regarding Trump’s trade policies, Borowski noted his distinctive approach: “Trump is a highly transactional person. His foreign and economic policies are closely intertwined. For example, in the case of Colombia, he initially threatened tariffs, but when Colombia agreed to accept certain migrants, the tariff threat disappeared.”
On Trump’s policy towards Europe, Borowski offered a particular observation: “Although Trump talks less about Europe compared to Canada and Mexico, this does not mean he has no plans. His primary goal is for Europeans is to increase defense spending—from the current 2% to 5%—and increase imports from the U.S.”
However, the expert also pointed out that “Trump 2.0” is different from his previous term: “This time, he is better prepared than during his first presidency. His choice of team members, such as the appointment of Scott Besant as Treasury Secretary—a notable investor, globalist, and opponent of protectionism—indicates that Trump plans to take a more cautious and gradual approach to tariff policy.”
European Challenges and the Energy Transition
“Unfortunately, the European economy continues to disappoint,” notes Didier Borowski. In his assessment, the region faces several systemic issues, including a lack of competitiveness, low productivity, and insufficient levels of private investment.
The ongoing energy transition could also create inflationary pressures. “This is particularly important for Europe, where the share of renewable energy in the energy mix has already surpassed that of coal,” the expert highlights. “This shift holds strategic significance for Europe’s energy autonomy.”
However, Borowski also sees positive trends. “Smaller European economies, such as Spain, Portugal, Ireland, and Greece, are demonstrating impressive growth rates of 2% to 4%. If we consider the Eurozone as a whole, the combined weight of these small economies is equivalent to that of Germany’s economy.”
Regarding Germany, the expert pays special attention to the elections scheduled for February 2025. “This is crucial for both Germany and all of Europe. Germans should rethink their economic model, taking into account energy security concerns and their dependency on China.”
Borowski also emphasizes the role of the European banking system. “European banks are in a favorable position due to current interest rate levels and the regulatory environment. They are less exposed to the impact of global trade tensions and can benefit from the growth of local markets.”
Russia’s Economy
Didier Borowski presents both short-term and long-term diverging scenarios for Russia’s economy. “Russia has transformed into a wartime economy, with 6% of its GDP allocated to defense—an unprecedentedly high figure,” he notes. “For comparison, this figure barely reaches 2% in Europe.”
“Surprisingly, despite sanctions, Russia’s economic growth has exceeded expectations,” Borowski continues. “This is primarily due to strengthened trade ties with China. Russia has successfully redirected its energy exports to China and India.”
However, the expert highlights several long-term challenges. “Russia’s economy faces serious structural problems: negative demographic trends, limited access to international investments, and technological isolation significantly constrain its long-term growth potential.”
“Excluding defense spending, Russia’s potential growth will be under significant pressure in the next decade,” Borowski predicts. “The challenge is that Russia will struggle to attract investments in non-defense sectors.”
In the context of international relations, Borowski states: “Even if Russia reaches an agreement with Ukraine, Western economies must quickly reassess their relationship with Russia. Otherwise, Russia will be forced to continue increasing military spending as the only way to sustain economic activity.”
“This creates a concerning cycle,” he concludes. “European countries, in turn, will have to increase their defense expenditures to maintain peace in Europe over the next decade. This is a new world order that everyone must adapt to.”
Emerging Markets and Technological Shifts
In his analysis of emerging markets, Borowski identifies contrasting trends. “India shows impressive growth potential of around 6%, whereas China’s growth rate has significantly slowed to about 3%,” he explains, adding that China faces deflationary pressures and serious issues in its real estate sector.
“The nature of inflation has changed,” Borowski notes. “Previously, inflation was primarily driven by rising food and energy prices, but now its main driving force is the services sector.” He predicts that Central Banks will no longer return to very low-interest rate policies, instead adopting a more cautious approach, which he describes as a ‘wait-and-see’ stance.
When discussing technological advancements, Borowski pays special attention to artificial intelligence. “Over the next five years, AI could have a significantly positive impact on productivity, but the role of the human factor should not be underestimated.”
Conclusion
Summarizing his analysis, Borowski notes that despite market instability, the global investment landscape offers numerous opportunities, ranging from emerging Asian markets to long-term sustainable investment themes.
Fixed-income instruments, small-cap companies, and financial institutions are particularly promising. However, the expert emphasizes the importance of asset diversification to ensure sustainable long-term growth.
“The high level of uncertainty requires a cautious and active management approach, but with the right strategy, today’s challenges can turn into significant opportunities,” Borowski concludes.
