Demographic ageing, slowing productivity gains, energy transition, technological competition: advanced economies are facing numerous complex challenges. In response, industrial policies are back in the spotlight, fostering competition. With the risk that desynchronised initiatives could trigger a race to outdo one another, leaving winners and losers.
United States: A paradox of perceived decline and economic resilience?
In the USA, Donald Trump's victory and the resurgence of the Make America GreatAgain movement illustrate a desire to reverse what many perceive as America's decline. However, with GDP per capita 10% higher than in 2019, compared with 2 to 3% in Japan and the Eurozone, doesn't the economic performance of the United States over the past two years reflect American exceptionalism?
The degree to which the US has outperformed other industrialised economies should not be understated.
Policy support - monetary and fiscal - has been very generous in order to avoid any demand problems, as after the 2008 during the Great Recession.But the main difference with the rest of the world in the post-Covid recovery is that the United States has outstripped everyone in terms of productivity growth: I'm even worried that demand is increasing too much and leading to overheating!
Beyond that, the deficit is a worrying factor: stimulus measures in the middle of an expansion would only exacerbate inflation, and the dollar's extra margin in relation to debt is not infinite.
Marcos Carias, Coface economist for North America.
Is the UK back after the painful Brexit episode?
After an intense period of political turmoil, the UK has strong reasons to expect greater stability, and seems to be gradually getting back on track. Coface has just upgraded its country risk assessment for the UK to A3. While the country has many strengths (demographics, universities, high-end manufacturing sector, key financial and legal hubs), some fundamental issues remain, such as unsustainable public finances, regional disparities of wealth and education, under-investment and low productivity.
However, it should be a better year for demand, both from households and governments.
Easing corporate insolvencies and lower interest rates should also support this along with important pro-growth policies in the pipeline: the Planning Bill in March should support the construction sector (among others) and industrial policies in the first half of the year should support investment.
Jonathan Steenberg, Coface economist for the United Kingdom, Ireland and the Nordic countries
Germany: confidence, the key to become Europe's economic engine once again?
Former leader of the European economy for most of the last decade, Germany has been facing multiple and intense challenges in recent years. The country is being heavily impacted by declining competitiveness or the energy transition, that brings strong growing pains for one of the world's largest industrial sectors focusing on automotive and mechanical engineering.
Our automotive sector has long been producing past the demand, our large bureaucracy prevents us from reacting quickly, and our main customers are the United States and China, who have been engaged in a trade war for years.
Finally, the energy crisis has caused our production costs to skyrocket. Beyond the clear structural problems, Germany technically has all the cyclical ingredients for a noticeable recovery: rising purchasing power, lower interest rates, investment capacity.
But what we need is confidence. And it will take time to get it back. For this year, we are therefore only expecting minimal growth of 0.2%.
Christiane von Berg, Coface economist for Germany, Benelux, Austria and Switzerland
Economic stagnation: contrasting winds in Asia-Pacific?
Economic stagnation worsened by the fast ageing of the population has been a reality for Japan for several decades. These phenomena represent a major risk: that of seeing living standards stagnate, or even decline, under the pressure of these demographic constraints. But Asia-Pacific is a highly dynamic and complex region: even among the region's advanced economies, there is a diversity of growth rates. Taiwan and South Korea benefit from their technology-driven economic structure but remain over-dependent on certain key sectors and suffer from development problems. Singapore, which is highly integrated into the global economy (industrial supply chains, global finance), is directly impacted when global growth weakens. Finally, Hong Kong is suffering the effects of China's economic slowdown.
There are winners and losers among the advanced Asian countries. In 2024, resilient trade was the cornerstone of Asia's growth. Rising global economic policy uncertainty is mainly reflected expectations of increased trade frictions. This means weaker manufacturing and trade activity.
By 2025, we expect growth to slow in advanced export-oriented economies such as Taiwan, South Korea and Singapore. Japan, on the other hand, should rebound: consumer spending and business investment should stimulate growth and help offset any weakness in exports.
Bernard Aw, Coface Chief Economist for the Asia Pacific region
Productivity gains: towards a collective decline on the global chessboard?
Does one of the solutions for advanced economies lie in the race for productivity gains? However, the current rate of productivity gains observed over the past ten years would have to at least double, just to maintain living standards!
By focusing on the specific challenges that each country faces, the advanced economies are fueling competition instead of cooperation. This could lead to a bidding war, generating de facto winners and losers, but above all it risks weakening them collectively in the global order.
Ruben Nizard, Coface Head of Sectorial Research and Political Risk.
Will all the advanced economies stay ahead? All the insights of our economists to be found in this replay of the Coface Country Risk 2025 Conference
Find out more about the risks to monitor in 2025:
- Explore our latest Country and Sector Risk Barometer: 'Into the Wild'
