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Asset Management: Monthly Macro Insights - December 2025

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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.

 

 

AI continues to drive economic momentum
 

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.

Emerging cracks beneath the surface
 
 

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.

Central banks face an increasingly difficult balancing act
 

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.

 

Read the Monthly Macro Insights

by Marc-Antoine Collard, Chief Economist and Head of Economic Research

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