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  • Macro economy

Tariffs risk recession - a forecast update

President Trump announced sweeping ‘reciprocal’ tariffs based on the size of the bilateral trade deficit. We expect both the US and the eurozone to slow sharply and only just skirt a recession, while the US will also have to deal with higher inflation. Monetary policy divergence is likely to re-emerge as a theme, with the ECB cutting rates further but the Fed remaining on hold. Fiscal stimulus should help drive a eurozone recovery in 2026, but growth improvement in the US next year will be more tepid.

Aggie van HuisselingArjen van DijkhuizenBill DivineyJan-Paul van de KerkeGeorgette BoeleNick KounisRogier QuaedvliegSonia Renoult(+7)
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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)

Our forecasts

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  • 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)
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  • 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)
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  • 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)
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  • 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 Quaedvlieg
Article tags:
  • 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 Dijkhuizen

Sustainability

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  • Sustainability

Important dynamics in the carbon cycle

Carbon can be stored in the atmosphere, ocean, soil, vegetation and in the lithosphere. The carbon cycle is a closed system. To limit temperature increase also the amount of carbon stored in the atmosphere needs to be limited. Limiting the amount of carbon stored in the atmosphere means that it needs to be stored in one of the other sinks and this will have an impact on those sinks.

Georgette Boele
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  • Sustainability

ESG Strategist – Sustainability-linked bond market at a crossroads

Back in September 2019, the Italian utility company Enel issued what would be the first ever sustainability-linked bond (SLB). In total, since 2019, EUR 257 billion was issued by 400 issuers through 823 SLBs. The SLB market reached a peak in 2021, fuelled by the entry of prominent issuers, and has been steadily declining since 2022, due to unfavourable economic conditions, rising interest rates, and heightened concerns around the credibility of the SLB market have hampered volumes since. Last year, SLBs accounted for 5% of all ESG bonds listed worldwide (i.e., green, social, sustainability, and sustainability-linked bonds).

Marta Teixeira
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  • Sustainability

ESG - Green bonds exhibit lower volatility and higher liquidity than non-green bonds

Following the first green bond issued in 2007 by the European Investment Bank, the green bond market has evolved to become what is now a USD 5 trillion issuance market. Green bonds offer several benefits for both issuers and investors, leading discussions amongst academics whether these advantages translate into green bonds trading at tighter spread levels (higher prices) compared to non-green bond. This spread difference is called the greenium and is positive if the green bonds trades at tighter spread levels. In this note, we aim to evaluate this topic and explore potential advantages of green bonds for market participants, such as volatility and liquidity. This note is the first of a series of notes about the greenium.

Larissa de Barros Fritz
Article tags:
  • Natural resources

ESG Economist - Supply risks of transition commodities mount

So far this year, the price index for transition commodities has risen by 10%, mainly due to the strong recovery of copper prices and some early signs of recovery in Chinese industrial activity.

Casper Burgering
Article tags:
  • Sustainability

ESG Economist - How will EU-ETS 2 nudge households energy bills?

The European Union Emission Trading System (EU-ETS) is the flagship climate policy in the EU. It has been around since 2005 and mainly covers emissions from electricity generation, heavy industry, aviation, and most recently international shipping. The remaining combustion emissions from the road transport, buildings, and other light industry sectors will be addressed in a separate system called EU-ETS2. EU-ETS2 will be phased in gradually with a monitoring and reporting phase starting in 2025 and the system shall be fully operational in 2027. Fuel suppliers, rather than consumers, will be responsible to report their emissions and surrender allowances. The new system envisions lower emission reduction targets of 43% by 2030 from 2005 levels, compared to 62% under EU ETS1. The system will cover main fuels like natural gas, gasoline, diesel, heating oil, Liquefied Petroleum Gas (LPG), and coal, which sometimes is used in some industrial settings. In an earlier note [1] we covered the main aspects of EU-ETS2 such as the phase in process, associated mechanisms, and potential dynamics. This note aims to highlight the channels by which ETS2 affects regulated entities, along with monetizing the expected impacts on households energy bills in the Netherlands.

Moutaz Altaghlibi
Article tags:
  • 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 Burgering
Article tags:
  • 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)
Article tags:
  • 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 Boele
Article tags:
  • 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)
Article tags:
  • 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 Altaghlibi

Pioneering economics with financial transaction data

Flagship Publications

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  • 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 Burgering
Article tags:
  • 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 Phlippen
Article tags:
  • 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)
Article tags:
  • 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)
Article tags:
  • 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 Teixeira

Our experts

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  • 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 Teerhuis
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"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 Fritz
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  • 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 Kerke

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