As the global economy faces a complex web of risks and opportunities, Amundi 's latest 2025 Mid-Year Global Investment Outlook provides a nuanced roadmap for investors navigating an uncertain landscape shaped by policy shifts, geopolitical tensions, and diverging regional growth patterns.

Vincent Mortier

"Government bond markets are rattled by the threat of higher debt and rising inflation fears, keeping volatility high," said Vincent Mortier, Group Chief Investment Officer of Amundi . "Investors are likely to demand greater compensation for long-dated bonds, making yields appealing. The name of the game will be diversifying away from the US and into European and emerging market bonds."

Uncertainty around U.S. policymaking, particularly on trade and fiscal matters, remains a key source of volatility. The current administration's protectionist stance has increased average U.S. tariffs by 15 percentage points compared to pre-administration levels, which Amundi expects will weigh more heavily on growth than on inflation. Global growth is projected to decelerate to 2.9% in 2025 and 2.8% in 2026, with developed markets expected to grow at 1.3% and emerging markets at 3.9%.

"The rewiring of the global economy and financial markets requires caution from forecasters, policymakers, and investors," Mortier emphasized. "Despite high uncertainty and a weak growth outlook, major economies and businesses have proven resilient so far."

In the United States, economic growth is anticipated to slow to 1.6% for 2025-2026, down from nearly 3% in 2023-24. Trade uncertainty and fiscal policies are expected to dampen demand, potentially leading to temporary inflation spikes and pressure on corporate margins. Amundi forecasts that the Federal Reserve will cut rates three times in the second half of 2025, bringing policy rates down to 3.5% by year-end.

Conversely, Europe offers a somewhat brighter outlook, buoyed by new trade alliances, a stronger euro, and expected rate cuts from the European Central Bank, which may lower rates to 1.5% by year-end. "Despite unpredictable policymaking, business resilience, and new rerouting trends, the expected rate cuts from central banks will create opportunities in global equities," noted Monica Defend, Head of Amundi Investment Institute. "We are focusing on themes such as European defence spending, US deregulation, corporate governance reform in Japan, and the ‘Make in India’ initiative."

Emerging markets, particularly India and ASEAN, are expected to be key beneficiaries of global realignments, supported by localized supply chains, easing monetary policies, and a rising middle class. Amundi projects India’s GDP growth at 6.6% in 2025 and 6.4% in 2026, while China is forecast to grow at 4.3% and 3.9% over the same period. Amundi ’s investment strategy remains cautiously optimistic, adopting a “mildly pro-risk” stance while emphasizing diversification and dynamic asset allocation. The firm favors steepening yield curves, high-quality European and emerging market government bonds, and selective exposure to resilient equity sectors such as financials, communication services, and infrastructure.

"Rotation will continue away from the US market," said Defend. "We favour global equities with a focus on valuations, solid margins, and careful sector selection through major themes such as AI, European defence, and domestic-oriented sectors in emerging markets."

In the face of long-term risks like stagflation, currency fluctuations, and shifting market correlations, Amundi recommends robust hedging strategies. Diversification through gold, commodities, infrastructure, and private debt is seen as crucial, alongside currency diversification for non-USD investors.

As the global economy continues its delicate balancing act, Amundi ’s outlook underscores the importance of flexibility, selectivity, and geographic diversification to successfully navigate the remainder of 2025.