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As we look ahead to 2025, experts at UBS are forecasting steady global economic growth, but not without a few bumps along the way. In a recent interview with Kathimerini's Panayiotis Rougalas, UBS’s Dean Turner and Themis Themistocleous shed light on what we can expect—from potential trade tensions sparked by a Trump presidency to the reforms needed for Cyprus to thrive.
A Resilient Global Economy—But Trade Clouds Loom
Dean Turner, Chief Economist for the Eurozone and the UK at UBS Global Wealth Management, believes global growth will remain solid, though slightly slower than in 2024. Much of this is thanks to the United States, where consumer spending, lower interest rates, and flexible fiscal policies are keeping things moving.
But there’s a twist. Turner cautions that a potential return of Donald Trump to the White House could stir up trade tensions, particularly with Europe and China. “It’s reasonable to assume that sometime next year, Europe will be in Trump’s crosshairs,” he said. While tariffs are not certain, they are definitely “on the radar.”
Themis Themistocleous, Global Head of the UBS EMEA Investment Office, agrees. “Retaliatory tariffs could weigh on European growth,” he said, adding that while the worst effects might hit in 2026, it’s a risk that can’t be ignored.
Europe’s Slow and Steady Path with a Helping Hand from the ECB
Europe’s economic outlook is less exciting, with growth expected to hover around 0.7% to 1% in 2025. Turner sees countries like Spain, the UK, and Switzerland outperforming Germany, France, and Italy. What could help? Falling interest rates.
“The ECB is likely to cut rates at each meeting until June,” Turner predicted, expecting them to land at around 2%. But it’s not just about rate cuts. Turner noted, “We’re seeing unusually high savings rates in Europe, and if people start spending that money, it could give the economy a boost.”
Reforms Key to Cyprus’s Growth
When it comes to Cyprus, structural reforms are the name of the game. Themistocleous didn’t hold back, saying, “The judicial system really needs to improve. Investors need confidence that if things go wrong, the courts will protect them.” He pointed to issues like lengthy eviction cases and court decisions that drag on for a decade.
Digital upgrades are also critical. “Cyprus is a services-driven economy and is attracting tech companies, but digital infrastructure needs to keep up,” Themistocleous explained. He also highlighted the need for a tech-savvy workforce, suggesting that Cyprus must decide whether to train local talent or bring in skilled workers from abroad.
Green Investment: A Long Game for Europe
While Europe is making big investments in green technology, Turner doesn’t expect immediate benefits in 2025. “This is a multi-decade story,” he said. “Yes, we’re investing in wind farms and solar, but in the short term, some of these policies have hurt industries like Germany’s auto sector.” The long-term outlook is positive, but for now, the benefits will take time.
Cyprus’s Bright Spot: Credit Upgrades and Lower Debt
On a positive note, Cyprus recently saw its credit rating upgraded, thanks to a significant drop in public debt. Themistocleous praised this progress, saying, “Public debt has fallen a lot, and forecasts suggest it will drop another 60% in two years.” But he warned that Cyprus needs a financial cushion to protect against future shocks. “It’s an open economy, so it’s vulnerable to what happens outside its borders.”
Looking Ahead to 2025
So, what’s the big picture for next year? The world’s economy seems set to keep growing, with the U.S. leading the way. But as Turner summed up, trade tensions, ECB rate cuts, and smart reforms in places like Cyprus will be the key themes to watch. While challenges remain, there’s plenty of room for cautious optimism.
