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America is booming, Europe is reeling: Where investors should invest now!
In the outlook for 2025, investors will learn about contrasting economic developments in the USA and Europe that require new strategies.
America is booming, Europe is reeling: Where investors should invest now!
Amid the economic uncertainties that are currently affecting many investors, the current quarter of 2025 shows an ambiguous picture. The Schoellerbank AG has identified two different economic worlds in a recent capital market analysis: While the US economy is proving to be robust despite a slight slowdown, Europe is struggling with numerous political and structural challenges.
In the USA, innovative companies and a stable domestic market allow the economy to flourish. Around 82 percent of companies in the S&P 500 exceeded their profit forecasts. GDP growth is expected to be around 1.5 percent in 2025. Even if the forecasts for 2026 are already more cautious, innovation remains strong, especially in the tech sector, where companies like Amazon and Microsoft are at the forefront. These developments ensure high levels of productivity and structural growth.
European challenges
In contrast, things look bleaker in Europe. Confidence in political institutions has noticeably declined, which is slowing down the markets - especially in France after the resignation of Prime Minister François Bayrou and failed attempts at reform. German Trade and Invest warns that the uncertainty could also cause interest rates and financing costs to rise. Combined with a strong euro and new US trade tariffs, the export-oriented industry finds itself in an awkward position.
The IMF has sharply revised down Germany's forecast, with growth expected to be just 0.3 percent in 2025. This is a drastic decline that highlights the ongoing difficulties facing the German economy, particularly in the export sector. Many companies in Germany will therefore hardly experience any recovery in the near future as they have to deal with unclear customs regulations and the challenges in trade.
Global perspectives
Despite these difficulties, there are also bright spots. The MSCI Emerging Markets Index and the MSCI Japan occasionally show positive developments. The MSCI Emerging Markets Index is up almost 13 percent since the beginning of the year, while the MSCI Japan is up around 6.5 percent. Schoellerbank explains that European stocks, especially in the banking, mechanical engineering and chemical sectors, continue to be attractively valued and offer targeted opportunities for investors.
It remains important to look at global developments: The IMF forecasts global growth of 3.3 percent for 2025 and 2026, which is a slight increase compared to the previous two years. However, the essence remains that investors should consider a balanced and diversified investment strategy to withstand market challenges. In this way you can show your good hand in difficult times.
The current economic conditions make it clear that we are in constant change. Trust and clarity are still required in order to ultimately emerge stronger from this situation. A balanced portfolio could be the key to staying safe during this uncertain time.