Due to the geopolitical and trade policy uncertainties, the global economy stands between a slowdown and the escalation of risks. Trump’s customs resolutions and the tensions in the Middle East form an economically unpredictable environment for the years 2025 and 2026. In view of these developments, Coface has downgraded 23 sectors and four countries in its latest country and industry risk assessment. These include the ICT industry and retail in the USA and the textile industry in China. “The uncertainty is the new normality. The global economic outlets are more insecure than ever, since it is strongly dependent on the (geo) political and trade policy decisions by US President Trump. The reintroduction of the tariffs after the 90-day exposure period could have a significant impact on worldwide growth”
emphasizes Dagmar Koch, Country Manager Coface Austria.
The decisive trends that influence the global economy are primarily the US tariffs, which have already achieved a historically high level even in temporary suspensions or reductions. At the same time, the advanced economies have a significant increase in defaults of payment of around 80 percent in the first quarter of 2025 compared to 2024. Traditional industrialectors such as the metal and automotive industry and the chemical sector are particularly under pressure.
A significant slowdown of economic growth is expected: 2.2 percent growth in 2025 and 2.3 percent in 2026. If the geopolitical or trading policy situation further arises, growth of less than 2 percent cannot be ruled out.
Question mark inflation and trend reversal for Austria
There is also uncertainty with inflation. It could reach 4 percent in the United States by the end of 2025, with further upward risks in the event of higher energy prices. The large central banks will probably react with a continued careful attitude. However, if inflation in the United States is brought under control, the Fed could reduce interest rates as early as 2025. The ECB has announced that it will be maintained its interest in reducing, but pointed out that it approaches the end point. The uncertainty in Europe is all the greater, since the long -term budget consolidation measures that have been postponed could finally be implemented, while Germany occupies an economic stimulus program, the extent of which is currently difficult to estimate. The euro zone will grow by 1.3 percent in the coming year, with Germany showing a moderate recreation with an increase of 1.2 percent in 2026. “Austria should also benefit from this, but with a significant delay and in a significantly lower framework”
says Christiane von Berg, Head of Economic Research Benelux & Dach at Coface and explains: “After almost three years of recession, Austria could create the slow trend reversal towards growth in 2025. However, this will not be reflected in a positive GDP growth rate of 1.0 percent in 2026 for the previous year.”
In view of the only slow economic changeover, Austria retains its A3 rating, which stands for a satisfactory risk environment for business activities and for the entire economic and political situation in the country. This is the third best assessment on a scale from A1 to A2, A3, A4 to B, C, D and E (extreme risk).
Tensions in the Middle East and oversupply: oil market in the balancing act
The Israeli-Iranian conflict has rejected the concerns about the stability of the oil market. A fault or even a blockage of the Hormus road (the passage for 20 million barrels per day or 20 percent of the global offer) could increase prices to over $ 100 per barrel. Apart from this geopolitical environment, the data indicates a drop in price, which is due to increased production in the non-OPEC+countries, a demand weakened by trading voltages and the return of additional funding from Opec+members (2.2 million barrel per day). If no major crisis occurs, the prices should continue to fluctuate extremely, but should range between $ 65 and $ 75 per barrel.
Advanced economies: Resistance meets susceptibility
The US economy is confronted with two challenges: the scope of the tariffs and the question of how they can be absorbed by the economy. Despite the falling consumer confidence, the job market remains stable. The decline in GDP (-0.2 percent in the first quarter) reflects the preventive structure of inventory by the companies.
A mixed picture is shown in Europe: Germany recorded slight growth in the first quarter, while France continues to perform weakly. In Italy, the economic dynamics threaten to reduce, whereas Spain continues to benefit from tourism and the European means and can thus continue its positive development.
The emerging countries are the first victims of trading turbulence
In China, the temporary ceasefire in the tariffs led to an increase in exports, but the prospects are fragile. Despite growth of over 7 percent in the first quarter, India has a decline in consumption and reduction of the household scope. In Latin America, Mexico bears the main burden of trade policy uncertainty, which means that no growth is expected for 2025. In Brazil, after an upswing in agriculture, according to the EL-Niño-related losses due to the restrictive monetary policy (raising the key interest rate to 15 percent), a decline is expected. In Argentina, the “Mileinomics” reform program already has an effect: Despite low foreign exchange reserves, the country in 2025 could record GDP growth of 5 percent and in 2026 of 3.5 percent.
Steel overcapacities burden the global sector
The metallurgical sector is in a severe crisis, since in 2024 a steel overcapacity of 600 million tons was recorded worldwide, which corresponds to 25 percent of the global production volume. The already difficult macroeconomic environment, the tensions in the energy sector and the new steel tariffs tighten the situation for steel manufacturers, especially in Canada, Mexico and Europe.
COFACE: FOR TRADE
Coface has been one of the world’s leading companies in credit and risk management for almost 80 years and supports companies in finding and growing in an insecure and volatile environment. Regardless of size, location or industry, Coface offers its 100,000 customers comprehensive solutions in around 200 markets: War credit insurance, economic information, debt collection, securing project businesses. Every day we use our unique know-how and top technology to support trade-both in Germany and on export markets. In 2024, Coface employed around 5,200 employees and achieved sales of ~ 1.845 billion euros.