The global economy is proving resilient despite new tariffs and political tensions – in part thanks to strong US consumption, stabilization across Europe, and solid growth in Asia. These are the findings of our latest global Risk Review. Nevertheless, political risks have reached record levels worldwide
A resilient global economy despite growing challenges
The global economy has remained resilient despite a challenging environment. In addition to trade tariffs, the October 2025 Risk Review highlights that the weak US labor market and rising geopolitical tensions are among the most negative factors. At the same time, global political risk has reached a historic high – representing a structural risk for companies.
Global growth is expected to remain robust at 2.6% in 2025, before slightly declining to 2.4% in 2026.
Consumption in the US stabilizes the economy
The analysis shows that the US economy continues to perform better than expected thanks to robust consumer data and strong investment in artificial intelligence. Although the average US tariff rate now stands at around 18%, the economic impact has so far been limited. Companies have managed to adapt supply chains and absorb shocks; however, the first negative signs are appearing in employment, growth, and inflation.
The harmful effects of tariff policy are expected to increasingly impact macroeconomic development, with US inflation possibly reaching 4% by the end of 2025.
Neighboring Canada, on the other hand, is the only country downgraded in the latest risk assessment, due to pressure from high US tariffs, rising energy prices, and a slight increase in the labor force.
Europe shows small signs of recovery
In Europe, modest growth and a slight recovery are expected in 2026. Germany is showing initial signs of stabilization that could have an impact next year, while Spain remains the main growth driver in the eurozone with solid domestic demand. Czechia was rated better than in 2024 thanks to its resilience, despite its strong link to the weakening automotive sector.
However, these signs of a mild upturn are accompanied by subdued economic prospects. France and Italy continue to suffer from political uncertainty, hampering investment and weakening business confidence. The European Central Bank has reportedly ended its interest rate cuts for now. At the same time, corporate insolvencies rose sharply in the first half of 2025, with an 11% increase in Europe compared to 4% in advanced economies overall.
India drives Asia’s growth
Growth in Asia remains solid. With an impressive 7.6%, India continues to be one of the world's most dynamic economies. China is also growing, though at a slower pace, while Vietnam received an upgrade in the latest risk index. The country stands out for its strategic location, infrastructure, skilled labor pool, and political stability — making it one of the most stable economies in the region.
Nevertheless, corporate insolvencies in Asia-Pacific increased by 12%, reflecting the region’s sensitivity to uncertain demand and high costs.
Political risks reach record high
The global political and social risk index reached a historic high of 41.1%, surpassing even the coronavirus pandemic peak. Three key drivers are behind this surge: institutional fragility in the US, ongoing international conflicts, and growing social tensions in emerging markets.
Within Europe, France stands out for its elevated level of social unrest. Companies worldwide are therefore urged to remain vigilant and continuously adapt their strategies.
Examples of successful adaptation can be seen in the United Arab Emirates and Saudi Arabia, where economies are successfully diversifying. Both have improved their risk ratings. In the Arab Gulf states, the non-oil sector now accounts for 70% of GDP, up 20 percentage points since 2010 – highlighting strong momentum across the region.
Switzerland is positioned to tap into Eastern potential
Switzerland continues to hold a top (low) overall risk rating. However, the record-high number of insolvencies is a concern: growth currently stands at 26% year-to-date, surpassed only by Italy (35%) and Hong Kong (33%). This upward trend is partly due to changes in the insolvency framework introduced at the beginning of 2025 – yet insolvencies have now been rising for five consecutive years. For 2026, only a slight downward correction is expected, given below-average growth forecasts and the negative impact of US tariffs.
Still, there are promising opportunities for Switzerland to shift its export focus toward the East – particularly the Middle East, Russia, India, and China. In 2024, 10% of all Swiss exports went to China, making it the third-largest export market for Switzerland. Negotiations between China and Switzerland to expand their free trade agreement could further unlock growth potential.
Our full forecasts and analysis in the Coface Risk Review (.pdf file)
