Article tags:
  • Macro economy

German Elections - ‘GroKo’ likely amid further political fragmentation

Friedrich Merz of the Christian democratic CDU/CSU poised to be the next German chancellor – Yesterday, Germany voted in a crucial election impacting not only their economy and domestic policies but also European policy-making amid geopolitical tensions involving Ukraine, NATO, and potential US tariffs.

Jan-Paul van de KerkeBill Diviney(+1)
Article tags:
  • Macro economy

Global Monthly - Buckle up – this is just the beginning

The early days of the Trump administration have been predictably chaotic. Businesses and investors had better get used to the new environment of radical policy uncertainty. An earlier end to Fed rate cuts is likely to drive the euro below parity later this year. This will take the edge off of the tariff blow to European exports, but it won’t fully offset it. Still, Europe isn’t powerless: the EU has long prepared for negotiations with Trump, while the German election could free up much-needed investment to deal with structural competitiveness challenges. We preview the German elections in the first of a series of articles in this month’s Spotlight*. Regional updates: The consumer is finally waking up in the Eurozone, helped by ECB rate cuts, while in the Netherlands, stronger domestic demand is likely to partly offset looming headwinds for trade. In the US, the goldilocks economy is back for now, but Trump policies will likely put an end to Fed cuts. China is seeing tailwinds from Beijing’s policy pivot and trade frontloading, ahead of likely US tariffs.

Bill DivineyPhilip BokelohJan-Paul van de KerkeAggie van HuisselingArjen van Dijkhuizen(+4)

Our forecasts

Article tags:
  • Macro economy

Global economic forecasts as of 22 January 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)
Article tags:
  • Macro economy

Eurozone - Consumer awakens as Trump enters the stage

We expect Q4 growth of 0.2% q/q, bringing 2024 annual growth to 0.8%. Our 2025 growth estimate still stands at 1.2%, as the periphery and France offset German weakness. With 2% inflation reached sustainably by April, the ECB is expected to remain in easing mode.

Jan-Paul van de KerkeBill Diviney(+1)
Article tags:
  • Macro economy

US - Powell shapes the present, Trump holds the future

Headline macro data returns to goldilocks’ ‘just right,’ just before Trump returned to office. Disinflation to resume; labour market not out of the woods yet. Rate cuts possible and likely in the first half of 2025; second half determined by Trump policy.

Rogier Quaedvlieg
Article tags:
  • Macro economy

The Netherlands - Consumer holds the key

Solid growth in 2024 is expected to continue in 2025, but external risks tilted to the downside. Inflation edged up in recent months and is expected to remain higher than eurozone inflation. Dutch house prices are expected to rise by 7% in 2025 and 3% in 2026, down from 8.7% in 2024.

Aggie van HuisselingJan-Paul van de Kerke(+1)
Article tags:
  • Macro economy

China - Beijing prepares for a (delayed) US tariff snakebite

Recent data show the economy enters 2025 stronger, amid Beijing’s policy pivot and trade frontloading. The recovery keeps showing large imbalances, with the supply side still stronger than the demand side. Beijing prepares for more stimulus to stabilise property/demand, partly to offset impact from US tariffs.

Arjen van Dijkhuizen

Sustainability

Article tags:
  • 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 Fritz
Article tags:
  • 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)
Article tags:
  • Sustainability

ESG Economist- Batteries have a key role to play if they have low carbon footprints

Batteries play a crucial role in the energy transition by storing the energy produced by intermittent renewable sources and they help mitigating grid capacity limits. The European Commission expects batteries to surpass pumped hydro storage as the main source of providing storage between 2025 and 2030. An updated regulation for batteries entered into force on 17 August 2023. The Regulation sets rules for traceability and transparency across the battery life cycle. Furthermore, it stipulates sustainability requirements, features rules on the circularity of critical raw materials, and establishes requirements on the performance and longevity of batteries. As a result, the carbon footprint framework and recycling rates will become more stringent in the coming years affecting both consumers and producers. The Batteries Directive will have a substantial impact on the batteries on the EU market. The regulation could slow the adoption of batteries and electric vehicles in the EU.

Georgette Boele
Article tags:
  • Sustainability

ESG Economist - Adapting to the heat: on climate resilience and adaptation finance

As the world warms, adapting to climate change has become a necessity. The IPCC defines climate adaptation as the adjustment of natural or human systems in response to actual or expected climate change. As global emissions continue to rise, the need for countries, businesses and households to adapt continues to increase. Adaptation, and adaptation finance needs to progress at the same pace as impacts continue to escalate. Current adaptation efforts are insufficient. Many countries are already experiencing negative impacts from acute or chronic physical risk. This lends urgency to the need for climate adaptation. This note discusses what climate adaptation is and what the challenges financing climate adaptation are.

Anke Martens
Article tags:
  • Sustainability

Carbon Market Strategist - EUA prices rise, thanks to gas drama

EUA prices maintained their upward trend driven by the jump in gas prices, which boosted the profitability of coal power generation. European industrial demand shows early signs of a recovery, while emissions from the power sector continued to decrease for the fourth year in a row. Bullish sentiment dominates driven by the rising uncertainty in European gas markets and geopolitical ambiguity of the US trade policies. We revisit our outlook for Q1 upwards to average 75 €/tCO2.

Moutaz Altaghlibi
Article tags:
  • Sustainability

ESG Strategist - What does the NZBA exodus tell us about banks’ climate ambitions?

Several prominent US and Canadian banks have announced that they are leaving the Net Zero Banking Alliance (NZBA), which is a coalition aimed at aligning the banking sector with global climate goals, that has gained significant traction over the last few years. The departures in December 2024 and January 2025 represent a decline of 22% in the total assets of the banks participating in the alliance, while these banks also represent 12% of the assets of the entire global banking system. Given the size and systemic importance of these banks to the global economy, their departure was perceived as meaningful and triggered a lot of questions on the future of the banks’ climate ambitions. In this piece, we aim to explore these questions and what their departure might mean for the energy transition.

Larissa de Barros Fritz
Article tags:
  • Sustainability

ESG Economist - Pace of EU emission reduction needs to increase by 50% to meet target

The EU is one of only a few countries/regions in the global top ten of GHG emitters that has significantly reduced emissions since the Paris Agreement, which entered into force in 2016. The others being Japan and the US. Nevertheless, the pace of emissions reduction in the EU needs to be stepped up to reach the targets set in the EU Green Deal. Other key EU targets for 2030, such as the share of renewable energy in energy consumption and the amount of primary and final energy consumption will probably not be met either if the pace of increase/decrease is not stepped up noticeably. With only about six years to go, we evaluate in this note the likelihood of the EU meeting its main climate goals in 2030.

Aline Schuiling

Pioneering economics with financial transaction data

Flagship Publications

Article tags:
  • 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

Article tags:
  • 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
Article tags:
  • 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 Fritz
Article tags:
  • 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

Stay informed

If you want to stay informed, simply compile your own subscription. Select the topics and frequency of your choice. From now on you will be notified of our latest research publications.