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Macro economy

Global Monthly - This is getting complicated

The outlook is getting muddied by rising US recession risk on the one hand, and eurozone defence spending on the other. In the near-term, growth is being distorted by trade frontloading. This is leading to a partial unwind of the Fed-ECB policy divergence narrative that was driving markets. Despite the massive policy shifts of the past month, we are keeping our forecasts unchanged for now, and plan to do a full review after the US’s so-called ‘Liberation Day’ tariff announcement on 2 April. Spotlights: 1) Are tariffs really the end game? We explore the feasibility of a ‘Mar-a-Lago Accord’; 2) Will defence spending revitalise eurozone growth? We think it could, but from 2026 onwards.

Bill DivineyRogier QuaedvliegAggie van HuisselingJan-Paul van de KerkeArjen van Dijkhuizen(+4)26/03/2025

Macro economy

Key views Global Monthly 26 March 2025

US tariff threats have surprised even our pessimistic expectations, with the most important announcement still to come on 2 April. China, the EU and the US’s neighbours are expected to bear the brunt. For the eurozone, a new upside risk comes from likely significant increases in defence spending, and in Germany new infrastructure spending. This will blunt the impact of tariff rises. Global trade and growth are also initially benefiting from a frontloading ahead of tariff rises, but a sharp slowdown is expected later in 2025. Domestic demand is in the meantime recovering in the eurozone and China, helped by falling interest rates, and in China, targeted fiscal measures. Inflation in the US is expected to reaccelerate, but to fall below target in the eurozone. This is likely to drive a divergence in Fed & ECB policy, with Fed policy staying on hold from here, and the ECB continuing to cut rates.

Bill Diviney26/03/2025

Latest news

Sustainability

ESG Strategist – Sustainability-linked bond market at a crossroads

Marta TeixeiraToday

Macro economy

China - After Liberation day

Arjen van DijkhuizenToday

Macro economy

Housing Market Monitor - April 2025 - Summary

Mike LangenToday

Our forecasts

Macro economy

Global economic forecasts as of 26 March 2025

Group Economics writes daily about developments in the macro economy. Here are our latest forecasts on interest rate and currency developments, prices in commodity markets and the economic trend in developed and emerging markets.

Wilma SchelvisMarloes Dekker-Kok(+1)26/03/2025

Macro economy

Eurozone - Frontloading at the front of the year

Despite high uncertainty, the eurozone economic recovery is unfolding broadly as expected. The first signs of frontloading are visible, providing a temporary boost to activity. Growth still subdued but on a recovery path, while inflationary pressures continue to slowly ease. The ECB is expected to pause as it nears neutral, though the April meeting will be a close call.

Jan-Paul van de KerkeBill Diviney(+1)26/03/2025

Macro economy

The Netherlands - Consumption to lead the charge

The second GDP calculation confirmed the Dutch economy grew by 0.4% q/q in Q4-2024. International developments have been unfolding rapidly, and we will revise our forecasts after April 2nd.

Aggie van HuisselingJan-Paul van de Kerke(+1)26/03/2025

Macro economy

US - The reports of a contraction are somewhat exaggerated

Import frontloading depresses 2025Q1 GDP nowcasts, while private domestic demand remains solid. This increases the probability of a technical recession, especially if further tariffs arrive later in Q2. Recession probabilities marginally elevated with current policy, with upside risks if tariffs are increased.

Rogier Quaedvlieg26/03/2025

Macro economy

China - Economy shows some resilience as more US tariff threats loom

Chinese economy shows resilience despite the stepping up of US import tariffs, and targeted retaliation. We expect policy makers to continue with stepwise fiscal stimulus and more monetary easing, although Beijing is keeping part of its powder dry, with more US tariffs threats looming in April.

Arjen van Dijkhuizen26/03/2025

Sustainability

Sustainability

ESG Economist - Gas consumption structurally lower since energy crisis

Gas consumption in the Netherlands was on average 27% lower over the period 2022-2024 compared to the 2019-2021 period. Electrification on the basis of renewable energy sources is gaining in importance in the Netherlands, but gas-fired power generation will remain necessary for the time being. Despite the decline in gas usage and GHG emissions, lower gas prices in 2025 could lead to an increase in gas consumption and emissions, especially in industry and greenhouse horticulture.

Casper Burgering18/03/2025

Macro economy

ESG Economist - German election result to slow down but not derail climate policy

The next German coalition government will likely include the CDU/CSU and the SPD, reviving the famous GroKo (Grand Coalition), and following on the heels of what was considered as one of the most “climate ambitious governments” in the world.

Marta TeixeiraAline Schuiling(+1)17/03/2025

Sustainability

ESG Economist - Carbon offsets: To Tree or Not to Tree?

UN Climate Change has a workstream on reducing emissions from deforestation and forest degradation in developing countries or REDD+. Countries have established the REDD+ framework to protect forests as part of the Paris Agreement [1]. Various companies have certified carbon standards programs to drive finance towards activities that reduce and remove emissions, improve livelihoods and protect nature. Moreover, there is a voluntary market that sells carbon credits to buyers that try to offset the carbon emissions that will take longer to reduce. One of the focus areas of these offsets is planting trees. On 26 June 2024, we published an ESG Economist – Could carbon sequestration technologies help to reach net zero? [2]. One of the biological carbon sequestration technologies is planting trees (afforestation and reforestation). Afforestation is converting long-time non-forested land into forest. Obviously, the intention of these initiatives is good. Generally, it is assumed that deforestation leads to higher global mean temperatures and that forestation will limit the increase of global mean temperature. But as often is the case we need to ask ourselves if all relevant aspects are considered and whether they have the desired effect. This report focuses on that question. We start with the possible climate effects of planting or removing trees. These effects are important to consider when certain carbon offset products are considered. Then we show the results of scientific research. We end with a conclusion.

Georgette Boele12/03/2025

Sustainability

ESG Strategist - Investors pricing rating downgrades for TotalEnergies

Last week, the oil and gas company TotalEnergies issued a EUR 1.3bn 20-year unsecured bond, which attracted over EUR 3bn in orders. Considering the global energy transition, it is important to examine how oil and gas companies are positioning themselves and how investors anticipate their future trajectories. An analysis of the bond curves for oil and gas companies reveals that these bonds, particularly those with longer maturities, are trading at levels comparable to those of lower-rated companies. These results may suggest that investors expect these companies to be downgraded by two to three notches in the future.

Marta TeixeiraLarissa de Barros Fritz(+1)10/03/2025

Sustainability

ESG Economist - Are US tariffs a catalyst for EU energy transition?

The world we are living in is changing at a fast pace where a decades-long pro-globalisation stance is being challenged by the vulnerability of supply chains during the COVID pandemic and the energy crisis after that. Furthermore, faced with domestic challenges and the rise of nationalism, the prioritization of domestic agendas has come to the fore in many countries. The most recent development in this regard is the (proposed) new tariffs imposed on imports from several trading partners by the new US administration, along with a rolling back of climate policies. This opens the door to multiple scenarios of retaliation and the rise of trade wars between the US and its trading partners (see our most recent macro notes on the subject (1) and (2)). These trade conflicts could affect trade flows, growth rates, and transition pathways all over the world. In this note, we revisit the concepts of free trade and the role of its international governing body, the WTO. We also outline the main channels by which a US invoked trade war affects the transition process in the EU highlighting the main impacts on cost structures and supply chains. We end with a conclusion. This note is the first part of a series analysing the impacts of trade war on the energy transition.

Moutaz Altaghlibi05/03/2025

Sustainability

ESG Strategist - Omnibus: watering down EU’s climate ambitions

Yesterday, the European Commission (EC) published the Omnibus proposal (1). This proposal follows the recommendations of the Draghi report (2) and the EC’s promise to reduce administrative burdens by at least 25% and by at least 35% for SMEs before the end of the mandate in 2030. It aims to provide substantial simplification in the field of sustainability regulations, while squaring the EU’s ambitions towards a sustainable transition and enhancing EU companies’ competitiveness. The package released by the EC includes amendments to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the InvestEU Regulation, and the Carbon Border Adjustment Mechanism (CBAM), which we will analyse in a later note. The package is accompanied by a draft Taxonomy Delegated Act for public consultation. In this note we will analyse the proposed changes and compare them to the previous regulations. Moreover, we conclude by making an assessment of how these changes will impact the transition and the achievement of EU’s 2050 climate targets.

Marta Teixeira27/02/2025

Sustainability

ESG Economist - Chance of meeting energy efficiency targets is very low

The more energy-efficient companies are, the less energy is wasted and the more is saved. In more concrete terms, this means that with lower energy consumption, at least the same amount of output will have to be realised. Amongst many companies in sectors, energy efficiency has been embraced more often over recent years, mainly due the relatively high and volatile energy prices. Lower energy consumption reduces operational costs and has a favourable effect on margins. But at the same time, energy efficiency improvements also reduce greenhouse gas emissions and make countries less dependent on energy imports. Energy efficiency is also seen as the low-hanging fruit. Every company – and every household – is able to start working on this tomorrow, so to speak. These are often relatively simple interventions at a low cost. For these reasons, energy saving is high on the European agenda. The EU's Energy Efficiency Directive (EED, 2023) has set energy-saving targets for each member state. Countries that fall under the EED must ensure a reduction in final and primary energy consumption of at least 11.7% in 2030 compared to the 2020 level (reference scenario). In this analysis, we will examine final energy consumption within the EU-27 and take a closer look at the trends. Based on the trend in final energy consumption, it is possible to partially map energy savings and energy efficiency. We will also highlight developments within climate sectors and which important measures have been or can be taken. For the Netherlands specifically, we will take a closer look at sector trends and finally we investigate the feasibility of the EU energy saving target for the Netherlands.

Casper Burgering26/02/2025

Sustainability

ESG Strategist - Uptick of EU GBS will be limited and restricted to a few sectors

The EU Green Bond Standard (EU GBS) is a voluntary standard introduced by the European Commission to enhance the transparency and credibility of green bond markets within the EU. It was introduced as part of the broader EU Action Plan on Financing Sustainable Growth, with the regulation applying from 21 December 2024. The EU GBS promote the integrity and accessibility of green bonds, enhancing investor confidence, and facilitating the flow of capital toward environmentally sustainable projects, ultimately supporting the transition to a low-carbon economy. By providing a clear definition of what constitutes a green bond, the EU GBS seeks to mitigate the risks of greenwashing, improve the comparability of green financial products, and ultimately drive additional investment into initiatives that align with EU environmental objectives, such as climate change mitigation and biodiversity preservation. Since the application of the EU GBS in late 2024, only three issuers (being one corporate, one financial and one SSA) have used the EuGB label so far (EuGB is the name given to a green bond that complies with the EU GBS). In this piece, we explore the potential for an EuGB market and the additional incentive for both issuers and investors to use the label.

Larissa de Barros Fritz20/02/2025

Sustainability

ESG Strategist - Climate disasters to exacerbate European fiscal deficits

Global warming is resulting in a rising number of climate and weather-related disasters. Although annual data is volatile, the costs of these disasters as a share of GDP are on a rising trend and expected to continue increasing during the coming years, even in a favourable 1.5°C global warming climate scenario where the targets of the Paris Agreement are met. In a previous research note ‘Which EU countries will suffer the most from extreme climate disasters?’ [1] we focused on the economic impact of climate and weather-related disasters in the EU at an individual country level under various scenarios of global warming. In this note we look more in depth at the impact on the public finances for a number of EU countries, namely their debt ratio levels, the impact on sovereign yields, and, ultimately, on their sovereign ratings.

Sonia RenoultAline Schuiling(+1)19/02/2025

Pioneering economics with financial transaction data

Flagship Publications

Sustainability

ESG Economist - 2030 climate target within reach for many Dutch sectors

In this publication, we answer the question of what the path of the Dutch economy and its sectors towards the ultimate 2050 climate-neutral goal might look like. In particular, we look here at the impact that low-carbon technologies can have on reducing greenhouse gases for 21 sectors in our so-called Sector Technology Pathways. What sectors are the heavyweights in the transition, where is reducing greenhouse gases most challenging and what are bottlenecks we need to overcome in the transition?

Casper Burgering13/02/2024

Macro economy

Stacking climate risks and financial resilience in the housing market

Climate change creates greater risks that are more frequent and cause more damage to Dutch homes. This study addresses the question of which districts can be deemed ‘climate-vulnerable districts’, i.e. those in which the risks of climate change, but also the costs of energy efficiency measures, may be too much for homeowners or properties to bear.

Sandra Phlippen15/01/2024

Macro economy

ESG Economist - Transition check: are renewables in crisis?

The energy transition is an economy wide process where a development in one part affects, directly or indirectly, other parts. Bottlenecks or costs challenges could harm an effective energy transition. The effect of today’s bottlenecks on the transition, such as the limited grid capacity, is magnified because of the mismatch in the timeframe for deploying grid extensions versus what is needed for electrification or renewable deployments.

Larissa de Barros FritzMoutaz Altaghlibi(+1)06/12/2023

Macro economy

Ripple effects - Exploring the impact of low Rhine water levels on the Dutch economy

The Rhine, the busiest river in Europe, is of great economic importance. Due to drought, both in 2018 and 2022, there have been episodes where the water level in the Rhine has dropped to critical levels, severely limiting inland shipping. According to the Kiel Institute for the World Economy, in November 2018, low water levels led to a drop in industrial production by 1.5 percent, causing a decline of German GDP by 0.4 percent. 1)

Jeannine van Reeken-van WeeAlbert Jan Swart(+1)02/11/2023

Sustainability

ESG Strategist - How exposed are companies and banks to biodiversity risks?

Biodiversity stands for biological diversity. The loss of biodiversity translates into the loss of services provided by ecosystems to the real economy. There are two types of risks associated with biodiversity: physical and transitions risks. Physical risks stem from the loss of biodiversity (for instance, disappearance of animal pollinators, like bees), and transition risks stem from regulations/policies introduced by regulators to mitigate biodiversity loss (such as the introduction of a tax on fertilizers or the implementation of Natura 2000). Physical risks are captured by how much a sector depends on biodiversity (e.g. agriculture depends a lot on animal pollinators, like bees). And transition risks are captured by how much a sector impacts biodiversity (i.e. the more damage a firm causes, the more likely it is to be hit by policies acting against it). The ENCORE database provides qualitative assessments for each sector and sub-sector on their exposure to biodiversity risks and we use these to calculate quantitative biodiversity sector exposure scores. As per existing regulation, banks are required to report their loan book exposure per sector, according to the NACE categorisation. Hence, by combining banks’ loan book exposure per sector and sector scores on biodiversity dependence and impact, we were able to calculate individual banks’ exposure to biodiversity loss risks. Furthermore, we used Natural Language Processing to assess a bank’s awareness of its balance sheet exposure to biodiversity risks.

Marta Teixeira31/10/2023

Our experts

Our expert

“There is never a dull moment in the fixed income markets”

Jaap Teerhuis is a Senior Fixed Income Strategist at Group Economics of ABN AMRO Bank

Jaap Teerhuis01/06/2022

Our expert

"Debt capital markets play a crucial role in financing the green transition"

Larissa Fritz is a Senior Fixed Income Strategist, with focus on ESG at Group Economics of ABN AMRO Bank.

Larissa de Barros Fritz01/06/2022

Our expert

“To understand macroeconomic changes, micro-level data is increasingly important”

Jan-Paul van de Kerke is Senior Economist covering the Netherlands and the eurozone at Group Economics of ABN AMRO Bank.

Jan-Paul van de Kerke01/06/2022