GCC set to maintain economic resilience amid global uncertainty in 2025

The Gulf Cooperation Council (GCC) is expected to remain a bright spot for global growth in 2025, according to Standard Chartered’s Global Market Outlook for 2025. Despite a projected slowdown in global growth to 3.1% from 3.2%, the GCC is expected to outperform, driven by resilient non-oil sector growth and strategic investments that underpin its economic diversification.

The GCC’s focus on long-term transformation continues to shield the region from many global economic challenges. Investment in non-oil sectors and a conducive environment for private-sector growth are expected to sustain momentum in 2025. The report also highlighted that lower interest rates are likely to provide additional support, particularly for borrowing-sensitive industries across Saudi Arabia, the UAE, and Qatar. While broader MENA economies, including Egypt and Lebanon, face heightened pressures from regional conflict, the GCC remains relatively insulated and well-positioned for steady expansion.

Globally, the global economy is bracing for the fallout from the US election. The clean sweep for President-elect Trump and the Republican party gives them a clear mandate to implement their policies, including significant tariffs on key US trading partners, including China. Trump’s pro-growth and protectionist policies are likely to be inflationary for the US, with consequences for the rest of the world. On the geopolitical front, Trump has said that he would end the wars in Ukraine and the Middle East, which would have far-reaching consequences globally.

Protectionist trade policies, high interest rates, and geopolitical uncertainties are expected to weigh on growth. The US, buoyed by its strong consumption and services sectors, has defied recessionary predictions despite elevated interest rates. However, a softening labour market and slower wage growth are anticipated to moderate consumer spending in 2025.

By contrast, the euro-area economy continues to struggle. Germany and France, the region’s largest economies, risk slipping into recession. Renewed US tariffs on the EU would further weaken the region’s already-fragile economy. Exports are a primary growth engine, and the manufacturing sector has already been under pressure in recent years from elevated energy costs, weak demand, and greater competition from abroad. The Russia-Ukraine situation is another source of risk for Europe, as the potential reduction of US support for Ukraine would place a greater burden on the region. Given limited fiscal space, these pressures may force the ECB to move even faster on rate cuts than expected, widening the interest rate differential with the US.

China is also likely to bear the brunt of US tariff policy. The authorities prepared for the potential fallout by delivering additional stimulus to support the domestic economy in September, aiming to boost growth in late 2024 and early 2025. In a worst-case scenario of 60% US tariffs on all imports from China, the Bank expects further stimulus focused more on consumption than investment. Net exports contributed significantly to China’s growth in 2024 but are expected to decline substantially in 2025 and while the PBoC is expected to keep monetary policy loose, expansionary fiscal policy will be the biggest source of support for 2025 growth, with China’s economy expected to grow 4.5% next year.

Elsewhere across Asia, the report expects growth in ASEAN and India to slow slightly in 2025 versus 2024 because of monetary tightening and the moderating economic outlook for key trade partners – namely the US, the euro area and China. That said, growth in the region should remain healthy.

“Amid global economic uncertainties, the GCC emerges as a rare bright spot, showcasing its resilience and adaptability,” commented Ayesha Abbas, Managing Director and Head of Affluent and Wealth Solutions, Europe, Middle East and Africa, and UAE at Standard Chartered. “By focusing on economic diversification and leveraging opportunities in non-oil sectors, the region continues to chart a path of sustainable growth. The GCC’s commitment to transformation has positioned it as a dynamic force in the global economy. With its strategic investments and stable outlook, the GCC is set to play a pivotal role in driving global economic momentum in the year ahead.”

 

US stocks’ outperformance fades

US stocks lagged behind global peers in the first two months of 2025, breaking a trend that has characterised much of the past 15 years, according to a report by Goldman Sachs Research. Chinese and European equities have done particularly well, up 14% and 8% respectively compared with US stocks so far this year (as of 26 February).

Despite high valuations and market concentration, US equities have been propelled higher in recent years, driven by the exceptionally profitable US technology sector and optimism about the country's economy.

“For more than a decade, investors would have been served better by ignoring the rules of diversification and rather concentrating exposure to the US equity market and a very small group of technology companies,” Peter Oppenheimer, Goldman Sachs Research’s chief global equity strategist, wrote in the report. Since the start of this year, however, market returns have been broadening out, and diversification - across geographies, sectors, and themes - is paying off.

Several themes are, for the first time in a long time, outperforming US large cap technology. Advances in Chinese AI have reignited interest in China tech (now up over 35% from its January low), while developments around the war in Ukraine are triggering a surge in performance for European stocks and companies exposed to potential reconstruction. There are also signs that equity markets are ripe for stock pickers.

“Investors came into the year too optimistic about the continuation of the trends that have defined the past decade in equities, while they were too bearish about the opportunities in assets that had long underperformed,” Oppenheimer added.

He noted that German stocks have rallied amid the prospects of lower gas prices stemming from a possible Ukraine peace deal. “The potential for greater fiscal spending following the German election, and a pick-up in European governments' push to deregulate and stimulate growth means that, after all, things may not be quite as bad as the markets have been pricing.”

 

UK business confidence rose to six-month high in February

Business confidence in the UK increased 12 points to 49% in February, the highest level since August 2024, according to the latest Lloyds Business Barometer. The boost in confidence was mainly driven by increased economic optimism, which rose 18 points to 42%, the highest level for six months and the largest single monthly increase since late 2020. Currently, 63% of firms said they feel more optimistic about the economy, up from 52% last month. 

Businesses’ own trading prospects also improved with a six-point rise to 57%, marginally surpassing last year’s high of 56%, and the highest level since 2017. Nearly two-thirds (65%) expect stronger activity in the coming year, up from 60% last month, while 8% expect less activity, down from 9% last month.

The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide. The results show that businesses confidence levels in February were significantly above the long-term average of 29%. The increased sentiment is being felt by businesses across the UK, with 11 out of 12 regions reporting higher confidence, the most widespread increase since April 2021.

Businesses reported a significant rise in hiring intentions, with the net balance rising nine points to 41%. This comes as firms identified hiring and upskilling employees as their biggest growth opportunity over the next six months. The majority (56%) of businesses plan to expand their workforce, up from 49% last month. Several industries anticipate higher staffing levels, including manufacturing, retail and parts of the services sector, such as hospitality. 

Two-thirds of businesses (66%) expect to raise their prices in the coming year, up from 61% last month. The proportion of businesses expecting to reduce prices is unchanged at 2%. This resulted in a 5-point increase in the net balance to 64%, with the most significant rises in price expectations reported by firms in the manufacturing, retail and education sectors.

“The rise in business confidence demonstrates the resilience of UK businesses and their ability to navigate challenges, such as rising costs and uncertainty,” said Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking. “Increased optimism, along with an expected uplift in trading prospects, is prompting businesses to invest in growing and upskilling their workforce, putting them in a prime position to capitalise on increased demand and drive future growth. This chimes with the expectations businesses set out at the beginning of the year, where they predicted a strong start to 2025, with the majority (70%) expecting to see their turnover increase in the year ahead. To sustain this positive momentum, it is important that businesses continue to innovate and adapt, ensuring they remain competitive and resilient to future challenges.”

 

US policies elevate global economic risks

The global economy will face significant headwinds in 2025 from potential changes in US policies, a report from Moody’s has cautioned. In the report’s base case, G-20 advanced and emerging economies are set to collectively expand by around 2.5% in 2025 and 2026 - a step down from the 3.2% average growth over the decade before the Covid-19 pandemic.

The global economy's resilience will be tested this year. The base case incorporates policy changes implemented since last November, but evolving US policies on trade, immigration, budget and regulation introduce significant risks to the Moody’s forecasts. Financial markets remain buoyant and are potentially underpricing the possibility of escalating trade frictions and weaker economic outcomes.

G-20 advanced and emerging market economies are well positioned to manage through a difficult backdrop. The US economy is slowing gently, and Moody’s expects the recovery in Europe to gain momentum as monetary policy is loosened there. In China, private consumption remains weak, but investment and exports are still driving growth. The government and central banks are focused on lending and supporting the real estate sector. Most G-20 emerging market economies entered 2025 on firm footings but differ in their vulnerability to evolving global trade risks.

The report also suggests that monetary policies will diverge further among G-20 economies. Sturdy US growth has given the Federal Reserve the option to keep the federal funds rate on hold for now. Moody’s expects it to resume policy normalisation later this year with rate cuts in September and December. The European Central Bank (ECB) cut its deposit rate in January, and the report says there will likely be three to four more cuts this year to support euro area economic activity. Meanwhile, the Bank of Japan (BoJ) will continue its policy normalisation with rate hikes.

Meanwhile, US policy shifts could create a more difficult global economic environment. Enduring policy uncertainty will dampen business investment as firms adopt a wait-and-see approach. Additionally, the impact of new or higher trade barriers is unlikely to be offset by stimulus from tax cuts and deregulation. However, the administration's desire for strong growth and its sensitivity to financial market volatility may temper overly disruptive policy changes.

 

US business owners optimistic on national and local economy

Nearly eight in 10 (78%) business owners in the US are optimistic about prospects for their own business, according to PNC’s latest semi-annual survey of small and mid-sized business owners. This figure is little changed from last autumn (76%) and near the all-time high (79%) for the survey, recorded a year ago.

Now in its 23rd year, the survey found 50% of owners are optimistic about the national economy hovering just under the survey-high levels recorded last fall (56%) and spring (55%), while a majority (56%) are optimistic about their local economy – a drop from the survey-high mark measured a year ago (63%).

“The latest results from PNC's survey of small and mid-sized businesses demonstrate the US economy remains in solid shape in the spring of 2025, with continued strong demand and a good labour market,” said Gus Faucher, Chief Economist of the PNC Financial Services Group.

Higher revenue businesses are among those more likely to be optimistic about the national and local economy as well as prospects for their own business. This same tier of business owners is most likely to anticipate increasing sales in the coming months and to expect to see an increase in profits in the next six months.

“Demand from both consumers and businesses is increasing, driving solid gains in revenue and profit across industries,” Faucher added. “The US economy should continue to expand through the rest of this year and into 2026, supporting small and mid-sized businesses.”

Zooming out, the overall portion of business owners expecting increasing sales in the coming six months has been unchanged since the autumn (65%) and has been up from last spring (55%). In parallel, profit expectations for the next six months remain steady with a majority (57%) expecting an increase, matching the reading last fall and near the level from a year ago (52%). Manufacturing and construction sector businesses are among those most likely to expect sales increases while services businesses are least likely to expect an increase.

Inflation is the predominant concern among business risks for owners, with more than four in 10 (43%) extremely concerned, unchanged from six months ago and more than double the level from last spring (20%). Just over half (53%) of business owners plan to increase prices in the next six months, a drop from last fall (61%) and approaching the level from a year ago (47%). Among businesses expecting to increase customer prices, two in 10 (20%) plan to raise them by 5% or more, about half as many as last fall (38%).

Fewer than two in 10 (15%) business owners expect to increase the number of full-time employees in the next six months, similar to the level last fall (18%) and significantly less than a year ago (21%). The portion of business leaders predicting an increase in inventory in the next six months is at a survey high (42%), similar to last fall (41%) and up from (34%) a year ago. Meanwhile, a quarter (26%) of business owners are expecting their cash reserves to be lower next year than they are now, up significantly from last fall (17%) and a year ago (7%).

 

The Export-Import Bank of Korea renews $300m loan facility to Trafigura 

The Export-Import Bank of Korea (KEXIM) has renewed a three-year loan facility amounting to $300m with Trafigura. The facility was coordinated by Banco Santander and co-financed with DBS.

Trafigura is a major supplier of vital resources, including battery metals, and the facility will support the company to provide a stable supply of critical minerals to customers in South Korea.

The facility was initially put in place in December 2021 and subsequently upsized in May 2023. Its renewal underscores the continued support and recognition of Trafigura’s role in global supply chains, securing the procurement of critical mineral resources to support economic development.

“The battery metals market is complex and rapidly evolving amidst shifting geopolitical dynamics,” noted Andrew Starkey, Chief Financial Officer, Asia Pacific for Trafigura. “Trafigura’s expertise, global reach and extensive supply chain capabilities uniquely positions us to provide South Korean industrial companies with secure access to critical minerals such as cobalt, copper and lithium.”

 

Embat acquires Necto to enhance global banking connectivity

Embat, a European fintech specialising in real-time treasury management, has acquired Necto, a US-based provider of premium bank API connectivity. The acquisition is designed to strengthen Embat’s cloud-based treasury platform, which centralises receivables, payments, and cash flow forecasting while automating accounting and bank reconciliation through AI.

By integrating Necto’s technology, Embat aims to enhance its real-time banking connectivity infrastructure, expanding partnerships with banks such as J.P. Morgan, Citi, Barclays, HSBC, and Deutsche Bank. The move also increases its presence in markets including the UK, Spain, and the DACH region.

Necto’s platform provides a single bank connectivity access point for corporate clients, eliminating the need for multiple integrations. Embat currently integrates with over 15,000 banking institutions and supports transactions in 70 currencies, managing financial flows for more than 300 corporate clients.

 

Mastercard and Emirates NBD look to accelerate digital payment adoption

Mastercard has entered a strategic alliance with Emirates NBD to enhance the bank’s digital payment solutions. As part of the agreement, the bank will adopt Mastercard Gateway within the Emirates NBD Pay platform to support fast, seamless and secure transactions across the region, becoming the first acquiring bank globally to offer Mastercard’s Brighterion AI technology through the integration.

The collaboration was announced with a view to expand into key regional markets, reinforcing both organisations’ commitment to accelerating digital payment adoption across multiple sectors such as retail, hospitality, and real estate. The partnership is designed to provide Emirates NBD’s corporate and government clients with best-in-class payment solutions, improving transaction efficiency and security.

Merchants using Emirates NBD Pay can now leverage a secure and sophisticated payment infrastructure, helping them scale their businesses while delivering a superior customer checkout experience.

 

PayPal and J.P. Morgan Payments broaden strategic relationship 

PayPal Holdings and J.P. Morgan Payments have announced the expansion of their strategic relationship. J.P. Morgan Payments plans to offer Fastlane by PayPal for its merchant clients in the UK and Europe. In addition, PayPal is planning to expand merchant acquiring to businesses across the UK and European markets by leveraging J.P. Morgan Payments’ Commerce Platform. 

In the industry today, 70% of consumers say guest checkout is important, but still abandon their purchases due to friction in the checkout process. With Fastlane, customers can complete their purchases in just a few clicks, significantly reducing friction and enhancing the overall shopping experience. As a result, merchants using the solution are witnessing a 51% increase in conversion rates among accelerated shoppers compared to those using conventional guest checkout options.

J.P. Morgan Payments and PayPal have a longstanding strategic relationship collaborating across acquiring and processing, cash management, and treasury services in several markets around the world.

 

Hang Seng explores RMB trade financing with HKMA’s liquidity facility initiative

Hang Seng Bank has become one of the first banks to participate in the Renminbi Trade Financing Liquidity Facility (RMB TFLF) introduced by the Hong Kong Monetary Authority (HKMA). 

The Bank successfully executed pilot trades under this RMB TFLF for four corporate customers, marking a step in its commitment to facilitate cross-boundary financing for corporate clients and to contribute to Hong Kong’s development as a major offshore RMB market.

“The newly launched RMB TFLF promotes trade finance settled in RMB, enhancing the liquidity of the city’s offshore RMB markets and potentially narrowing the onshore-offshore RMB interest rate gap in the medium to longer term,” said Liz Chow, Head of Global Markets at Hang Seng Bank. “This new facility also enables us to provide sustainable and attractive financial solutions addressing the growing demand for RMB financing among our commercial customers.”

 

ACI Worldwide joins Nacha’s Preferred Partner programme

ACI Worldwide has become a Nacha Preferred Partner for ACH Experience/Fraud Monitoring/Risk and Fraud Prevention.

ACI provides software solutions that power intelligent orchestration so banks, billers and merchants can drive growth, and the company’s account-to-account solutions are built specifically for ACH payment systems to support the ability to offer the innovative services today’s consumers and businesses expect. With AI-enabled fraud management, ACI provides precise, actionable intelligence to mitigate threats while reducing operational costs.

“Strong industry collaboration is essential to deliver best-in-class payments capabilities and localised customer solutions,” said Craig Ramsey, Head of Account-to-Account Payments, ACI Worldwide. “We are thrilled to join this important program to share our global experience with fellow members and collaborate on future payment developments in the US.”