While the global economy is reshaping and advanced countries are slowing down, hopes for global economic rebounding rely on emerging ones. If China, the largest emerging economy, is stuck in a structural slowdown, which countries can take over and offer the most opportunities to companies this year? Outlook for 2025.
New deal: who can make the most of it?
Emerging countries, which contribute to almost two-thirds of global growth, face a major challenge this year: reaffirming their role as a driving force of the global economy. This comes at a time when the slowdown of advanced economies and geopolitical and economic uncertainty, embodied by the Donald Trump's announced measures, are redefining the new world order.
From the structural slowdown in China to the countries exposed to tariffs, the diversification strategy of the Gulf countries, the momentum of India, the gradual recovery of South Africa and the beginnings of an upturn in Argentina, we have asked our Head of Macroeconomic Research: Which countries will be the most dynamic and which will be the ones to focus on in tomorrow's world?
China: domestic stimulus to hedge against tariff risks?
Despite achieving the official growth target of 5% last year, 2025 is expected to be another challenging year for China. Coface anticipates Chinese growth to slow to 4.3%, significantly lower than last year. Two key variables will shape China’s growth trajectory in 2025: the downside risk of higher tariffs and the upside potential of domestic stimulus.
However, the magnitude of these factors remains highly uncertain. Exports are likely to suffer due to increased tariffs imposed by US and other trading partners, compounded by a payback effect from front-loaded shipments. While Chinese producers may seek alternative markets, they risk selling at significantly reduced prices, as the economy grapples with industrial overcapacity. The critical question remains: Will China’s domestic stimulus be enough to steer the economy back on track?
We do not expect a big-bang stimulus to pull the economy out of deflationary pressures or to rest the housing and consumer markets. The whole idea is to mitigate the risks posed by higher tariffs, and to ensure that headline growth remains relatively stable. Any stimulus measures would be carefully calibrated, with their scale contingent on the magnitude of external shocks.
Junyu Tan, Coface economist for Northern Asia
Gulf countries: economic diversification to break free from oil dependence?
Will the Gulf Cooperation Council (GCC) countries, whose growth has been negatively impacted by the decline in oil production, recover this year? Despite recent efforts towards economic diversification, low energy prices and geopolitical threats are their major challenges in 2025.
Saudi Arabia and the United Arab Emirates, the two largest economies in the region, will continue their recovery. This will depend not only on increased oil production, but also on sustained growth in non-oil sectors such as transport, tourism, construction and finance.
We have asked our economist in the region: Can the Gulf countries benefit in the long term from the economic diversification strategy in which they have been investing for a decade?
South Africa: gradual recovery and reforms, a more business-friendly government?
After over two years of deep crisis due to the failure of systemic networks (energy, transport, public utilities) South Africa is in a phase of progressive recovery. More pro-business, the new government should continue to lead its reform programme aimed at fixing the structural problems of the South African economy (damaged infrastructure networks, high unemployment rate, etc.), notably by increasing the role of the private sector in the management of key industries (compared to inefficient public companies), for example by opening up port management and the rail network to competition.
Stable growth of over 3% would be achievable in the longer term if the announced reforms are implemented properly. The country benefits from a strong industrial base and highly developed financial and service sectors. However, it remains exposed to rising global protectionism and the announced measures of US economic policy. Furthermore, South Africa's historical ties with Russia and its links with China could put it in a challenging position to deal with the new Trump administration.
Aroni Chaudhuri, Coface economist for Africa
Argentina: are the ‘Mileinomics’ working?
Along with South Africa, Argentina is the other emerging country where investors regain confidence. The country emerged from recession at the end of 2024, after a difficult first year of Javier Milei's government with the implementation of his so-called ‘chainsaw plan’. 2025 is therefore a year of high expectations in Argentina: its GDP is expected to grow by 4.2%, after an estimated decline of 3% in 2024. This year, the recovery will be driven by household consumption, since the slowdown in inflation contributes to a certain recovery in purchasing power. In addition, private investment should also improve due to a relatively better business environment. Will Javier Milei reap the rewards of his ‘chainsaw’ plan?
One of the challenges for Argentina is the timing of the lifting of the currency and financial controls inhibiting the entry of foreign capital. This aims to redress the macroeconomic imbalances and enable a robust recovery of the economy. However, there is no certainty on this issue. The government could wait to accumulate a larger volume of international reserves, but it could also prefer to act after the mid-term elections in October, in order to avoid any risk to the demand for dollars.
Patricia Krause, Coface economist for South America
Learn more and find out what 2025 will look like:
- Our full study: Fragmentated globalization, the future of global trade
- Read our latest Country and Sector Risk Barometer (February 2025)
- Explore our Country Risk Handbook 2025, the must-have tool for decision-makers
