In its 2025 economic outlook titled ‘This is not a landing’, Robeco forecasts another challenging year for the global economy, marked by conflicting signals and complex dynamics. The US economy shows signs of continued resilience, despite cooling consumption. While other regions – particularly Europe and China – are getting out of the doldrums, they face ongoing secular pressures.
In its base case, Robeco expects US growth to moderate in 2025, tempered by cooling consumption and higher tariffs. Yet, both fiscal as well as monetary policy remains procyclical. Real GDP is projected to grow by 1.7%, reflecting a mild stagflationary trend as inflation remains slightly above consensus. European consumption may see a modest cyclical rebound supported by easing credit conditions and strengthening fiscal impulse, while China’s stimulus efforts are anticipated to offset some downside risks without reversing disinflationary pressures.
In a more optimistic, bull scenario, synchronized easing from central banks and steady disinflation could lead to stronger-than-expected global growth. With US consumption growth holding above its long-term trend and stable energy markets keeping inflation in check, this environment could fuel a global economic upswing. An easing of US-China trade tensions would enhance corporate confidence and investment, providing further support to both equity markets and emerging economies.
Robeco’s bear case envisions a turbulent environment where escalating tariffs, geopolitical tensions, and high military spending lead to global stagflationary pressures. The resulting inflation spike would disrupt bond markets and corporate investments, with US consumers bearing the brunt of rising tariff costs.
Peter van der Welle, Multi-Asset Strategist at Robeco: “The possibility of a stagflationary twist arising from trade policies could prove to be a powerful cross-current in an otherwise resilient US economy. In our 2025 outlook, we explain how momentum can reverse quickly in today’s data-driven environment, underscoring the need for flexibility in multi-asset allocation.”
Financial markets outlook
Robeco anticipates US equities will sustain their upward trajectory, with the S&P 500 reflecting extended valuations following a year of strong performance. However, market sentiment could shift abruptly as macroeconomic narratives evolve, highlighting the importance of diversified and dynamic portfolio management. Robeco’s outlook suggests caution in high yield bonds, where spreads are tight, while euro investment grade credit appears more attractive relative to the US. Looking ahead, Robeco anticipates that shifting macro data, US trade policy, and global liquidity conditions will all impact asset class returns in 2025.
Sustainable investing outlook
Heading into 2025, Robeco’s outlook on sustainable investing highlights the resilience of long-term sustainability trends, despite near-term uncertainties. The ongoing economic challenges may cause some businesses and investors to deprioritize sustainability in the short term. However, the overall trajectory toward decarbonization remains intact. While the US may see a near-term slowdown in support for sustainability under new leadership, Europe’s strengthened ESG regulations and ongoing commitment to green industries provide a solid foundation for sustainable investments. Despite some headwinds, the momentum toward global sustainability goals is expected to continue beyond 2025.
Rachel Whittaker, Head of Sustainable Investment Research at Robeco: “Despite challenges in the short term, the transition to a more sustainable global economy remains a key pillar of long-term growth. Europe’s regulatory and political environment remains supportive, while investors with a forward-looking perspective are well positioned to navigate short-term uncertainties effectively.”
