General economic situation

The geopolitical situation was marked by escalating conflicts and tensions in 2025, which increasingly led to a divide among the trading powers. The wars in Ukraine and the Middle East, growing tariff barriers and trade wars, tensions between China and the United States, conflicts arising from climate change as well as more frequent cyberattacks were among the main challenges. These developments also had an impact on the economy in 2025. Trade relations between the United States and China continued to deteriorate. The USA sparked a trade war, although the two countries later agreed on a framework agreement and tariffs were in part suspended. This trade conflict between the two major powers and higher tariffs imposed by the USA on a large part of its trading partners still burden international supply chains and make it more difficult for globally operating companies to plan.China’s economic performance was characterized by a slow-down in growth in 2025, caused by persisting challenges in the real estate sector, weak domestic demand and the trade conflict with the USA. These tensions also had an impact on the European economy, in particular on export-oriented European countries like Germany.The OECD forecasts a decline in global GDP growth from 3.3% in 2024 to 3.2% in 2025 and 2.9% in 2026, with a slight increase to 3.1% expected for 2027. However, this forecast is still subject to uncertainty. The growing trade restrictions could have a significant adverse effect on supply chains and global economic output. In the USA, GDP growth is expected to decline from 2.8% in 2024 to 1.8% in 2025. The economic boost from strong investment growth in high technology was dampened by higher tariffs.In the eurozone, GDP growth is expected to amount to 1.2% in 2025 and 1.0% in 2026. After two years of recession, the OECD forecasts slight growth by 0.3% in 2025 and 1.1% in 2026 for Germany.Both the European Central Bank (ECB) and the US Federal Reserve (FED) continued their monetary adjustments in 2025 after having initiated interest rate cuts in 2023 and 2024. The ECB reduced its lending rate multiple times during the year and lowered the deposit rate to 2.00% – one percentage point lower than at the end of 2024. Likewise, the FED cut US lending rates to a similar extent over the course of the year. The target range at the end of the year was 3.50% to 3.75%. Prior to that, the FED had reduced lending rates several times from higher levels. The euro’s performance versus the US dollar was significantly stronger in 2025 than in the previous year. The EUR/USD currency pair started at roughly USD 1.03 at the beginning of the year, but the euro noticeably gained in value over the course of 2025 and largely traded between USD 1.14 and 1.18 in the second half of the year. At year-end, the euro closed at just under USD 1.18.