Following a 12-month period when the global economy demonstrated surprising resilience, the outlook for 2025 suggests a return to more normalized growth. Such growth is expected to be led by the United States – with forecast annual GDP expansion of 2.5% – with the UK and eurozone lagging at 1.5% and 0.8%, respectively.
Amidst cooling inflation, central banks will continue on their rate-cutting path, which should lead to interest rates normalizing at around 3.5% in the US and UK, and 2% in the eurozone. Consequently, yields on cash will likely decline, increasing the incentive to invest elsewhere. Meanwhile, the Chinese economy should continue to expand despite facing ongoing structural challenges, particularly linked to real estate and demographics, while potential Trump administration tariffs threaten to weigh on global trade flows.
Those are the expectations of Daniele Antonucci, Chief Investment Officer at Quintet Private Bank, which today unveiled its annual forecast for the global economy, financial markets and key asset classes.
“2024 was a masterclass in unpredictability,” said Antonucci. “Despite earlier concerns, the US avoided a recession, the eurozone and UK experienced only mild downturns, and China picked up steam towards the end of the year. While there were occasional spikes in market volatility, the overall story of 2024 was one of growth – powered in no small part by structural themes, including the rapid rise of new technologies.”
Highlighting the transformative potential of artificial intelligence as one of the trends to watch in 2025, he said: “Rather than focusing on narrow technology themes, we believe the winners of tomorrow will likely be broader beneficiaries that deploy AI to gain a competitive edge. Healthcare diagnostics, circular-economy supply chains that reuse resources and reduce waste, and infrastructure such as data centers and next-generation power grids are just a few examples of how long-term innovation will be driven by AI.”
Turning to the global investment outlook, Antonucci said that the Luxembourg-headquartered private bank has maintained its equity overweight, with a preference for US equities. European exposure has been adjusted to neutral, reflecting downside risks such as higher tariffs. Quintet is likewise tactically neutral on emerging-market assets, including both equities and debt, due to similar apprehensions about China-US tensions as well as inflation and rate-hike concerns in Brazil.
Regarding fixed income, he noted that bonds – along with gold – can play a vital role in diversifying risks and, in some cases, appear attractively valued. “We are increasing our exposure to European government bonds, with a continued preference for short-dated ones, and to US Treasuries, while remaining underweight on the latter given fiscal concerns,” Antonucci said. “We are also reducing our exposure to European and US investment-grade corporate credit as we do not believe valuations adequately compensate for risks. Finally, with US fiscal policies potentially turning more inflationary, we are swapping shorter-dated US inflation-protected bonds for longer-dated ones.”
On the currency front, despite an inflation-adjusted interest-rate differential pointing to a weaker greenback, Quintet’s Chief Investment Officer expects the US dollar to remain strong in the near term versus the euro and pound sterling.
About Quintet Private Bank:
Quintet Private Bank (Europe) S.A., founded 75 years ago, is headquartered in Luxembourg and operates across Europe and the UK. Widely recognized as a private banking leader, Quintet serves wealthy individuals and their families, as well as a broad range of institutional and professional clients, including family offices, foundations and external asset managers. Quintet’s family of private banks includes:
For further information, please visit: www.quintet.com
For further information, please contact:
Nicholas Nesson
Group Head of Corporate Communications
Quintet Private Bank, Luxembourg
+352 4797 2065
nicholas.nesson@quintet.com
Disclaimer:
The statements and views expressed in this press release – based upon information from sources believed to be reliable – are those of Quintet Private Bank as of the date of publication (December 12, 2024) and are subject to change. This press release is of a general nature and does not constitute legal, accounting, tax or investment advice. All investors should keep in mind that past performance is no indication of future performance, and that the value of investments may go up or down. Changes in exchange rates may also cause the value of underlying investments to go up or down.
