Risks outweigh opportunities as uncertainty clouds global economic outlook: Munich Re

In its economic outlook for 2025, reinsurer Munich Re has said that although it expects the global economy to grow at roughly the same pace as in 2024, driven by continued development in the US and above-average growth rates in many emerging markets, uncertainty remains “extremely high” as risks outweigh opportunities.

Munich Re, one of the world’s largest reinsurance companies with operations across the globe, states that global economy will continue to be characterized by substantial differences in growth rates among major economies, and also across different economic sectors.

The global growth rate in 2024 was relatively moderate, says Munich Re, and was driven by momentum in the services sector, whereas industrial manufacturing showed only weak overall development overall.

“Global economic growth in 2025 looks set to roughly match the 2024 level,” says the firm. “Growth in the US is expected to dip slightly and remain solid at roughly 2.5%, also thanks to higher productivity momentum than in Europe. Economic output in the eurozone is predicted to grow by 1% again, after very weak growth in the previous two years.”

For the year ahead, the reinsurer highlights “stubbornly high geopolitical risks and uncertainty regarding future
economic policy developments” as key factors influencing economic trends.

Of high importance, notes Munich Re, is the political course that the US ultimately charts out, notably around trade policy, with tariffs already imposed on Canada, Mexico, and China, with tariffs on the European Union expected in the future.

“Major geopolitical risk scenarios also remain in the form of Russia’s war of aggression in Ukraine and – despite recent positive signals – the unresolved conflict in the Middle East, which could escalate again,” says Munich Re.

The rate of inflation in the eurozone is expected to continue to drop year-on-year and move closer into line with the 2% target set by the European Central Bank (ECB), and Munich Re expects the US to continue to face more elevated price pressure and feels it is unlikely to meet the Federal Reserve’s inflation target.

Overall, Munich Re warns that the uncertainty associated with the global economic outlook remains extremely high, with risks outweighing opportunities.

Michael Menhart, Global Chief Economist, Munich Re, commented, “I expect to see sustained robust growth in the US and ongoing stagnation in Germany in 2025. As such, the rate of growth in the eurozone is also likely to remain low overall. But this obscures the fact that economic momentum in Europe varies considerably from country to country.

“The risks clouding the global outlook outweigh the opportunities, and (geo)political uncertainty remains very high. If the new US administration opts to impose much higher tariffs, this will trigger a slowdown in global trade and growth–ultimately also in the US.”

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