Asset Management: Monthly Macro Insights - December 2025
Global growth remains resilient, but vulnerabilities are building
Despite geopolitical tensions and rising trade frictions, global growth remained surprisingly resilient in 2025. Strong investment in artificial intelligence, supportive financial conditions and expansionary fiscal policies helped offset the impact of higher tariffs and weaker trade dynamics. However, several of the factors that underpinned growth this year may prove temporary, raising questions about the durability of the current expansion.
Investment in AI infrastructure, from data centres to semiconductor manufacturing, has become a major contributor to global activity. The United States has been at the centre of this trend, while technology exporters in Asia and cloud-service providers in Europe have also benefited from rising demand. Strong equity market performance, particularly in the technology sector, has further supported consumption through positive wealth effects, while easier financial conditions and fiscal support have provided additional tailwinds.
Despite this momentum, signs of fragility are appearing. Labour demand has softened across most advanced economies, with unemployment gradually rising from historically low levels. At the same time, concerns over an AI-driven asset bubble are growing as valuations in the sector reach unprecedented levels. A correction in AI-related equities could have broader implications for financial markets given the sector’s significant weight in major indices.
Trade uncertainty and inflation remain key challenges. The full impact of higher US tariffs has yet to be felt and could weigh further on global trade and investment. Meanwhile, inflationary pressures remain persistent, particularly in services, complicating the task of central banks. The Federal Reserve must balance sticky inflation against weakening labour-market conditions, while the ECB faces the challenge of supporting a fragile growth outlook without reigniting underlying price pressures. Overall, the global economy enters 2026 with continued resilience, but also with growing vulnerabilities and elevated uncertainty.
