Despite the trade disruptions that marked early 2025, the global economy has shown notable resilience. However, the ripple effects are expected to intensify in the coming months. The October edition of Coface’s Risk Review highlights rising political and social instability and strategic shifts in the Gulf region
Given this context, Coface has updated 5 country risk ratings (including 4 upgrades) and made 16 sector assessments changes (with 9 upgrades). Explore the full details in the Business Risk Dashboard.
Key trends
- Coface forecasts global GDP growth of +2.6% in 2025, with a slight dip to +2.4% in 2026.
- Corporate insolvencies in advanced economies rose by 4% in H1 2025.
- Political and social risk index hits a record 41.1%, up 2.8 percentage points from the pre-pandemic average.
- Non-oil sectors now contribute 70% of the Gulf’s GDP as of end-2024.
Trade Tensions and Economic Adaptation
Following a summer of trade negotiations and rising U.S. tariffs, the global economy has adapted better than expected. The average U.S. tariff rate is now around 18%, significantly higher than the 2.5% under the previous administration, though down from a peak of 36% post-Liberation Day. Businesses have responded by adjusting supply chains and leveraging AI investments, helping cushion the impact. However, early signs of strain—slowing activity, employment challenges, and inflationary pressures—are emerging in the U.S., signaling broader macroeconomic consequences.
Coface’s revised forecast anticipates global growth of 2.6% in 2025 and 2.4% in 2026. The U.S. economy continues to perform better than expected, supported by domestic demand. In contrast, China is projected to slow further, and eurozone growth remains weak, despite a modest rebound in Germany. Inflationary pressures are subdued due to the global slowdown and declining commodity prices, particularly in energy and food. However, uncertainty persists regarding the trajectory of U.S. inflation, which is expected to reach around 4% by late 2025 or early 2026. On the monetary policy front, the Federal Reserve resumed its rate-cutting cycle in September, while the European Central Bank appears to have concluded its own, having set the deposit rate at 2%, barring a sharp downturn in economic activity.
At the regional level, India posted impressive growth of 7.6% in the first half of the year. Poland continues to show solid momentum with 3.4% growth, and Africa’s outlook is improving, with a projected 4.1% growth rate in 2025. However, the overall economic environment remains fragile due to geopolitical tensions and the impact of fiscal tightening in affected countries.
Corporate Insolvencies on the Rise
Insolvency rates are climbing, particularly in Europe (+11%) and Asia-Pacific (+12%), while North America remains stable. Although lower interest rates and improved credit access may ease pressures in 2026, businesses remain vulnerable to high operating costs and uncertain demand.
Political and Social Instability: A New Normal
Coface’s Social and Political Risk Index has reached an all-time high of 41.1%, surpassing pandemic-era levels. This underscores the growing importance of political risk in global economic planning.
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Major conflicts continue, while domestic tensions are escalating in several regions, notably in Africa (Burkina Faso, Niger), Pakistan, and Lebanon. The United States has experienced the most significant increase in risk, driven by growing institutional fragility and the rise of populism. In Europe, France is grappling with a deep and unprecedented political crisis. This environment compels companies to remain vigilant and continuously adapt their strategies.
Gulf Region: Diversification and Strategic Growth
The Gulf Cooperation Council (GCC) is undergoing rapid transformation, with non-oil sectors now contributing nearly 70% of GDP. Growth is projected at 3.8% in 2025 and 4% in 2026, fueled by domestic consumption and ambitious public initiatives like Saudi Arabia’s Vision 2030.
The United Arab Emirates and Saudi Arabia attracted record levels of Foreign Direct Investment in 2024— 46 and 32 billion dollars respectively — and are deepening their integration into global value chains. However, continued reliance on hydrocarbons and a prolonged decline in oil prices could strain public finances and delay the execution of major projects.
You can access the full analysis and forecasts in the Coface Risk Review (.pdf file).
