Sibos 25: remarkable resilience

The global economy is showing remarkable resilience in the face of unprecedented uncertainty around trade and geopolitics, according to ANZ’s Head of G3 Economics Brian Martin.

Speaking from London ahead of the Sibos financial services conference in September, Martin told ANZ Institutional Insights on video that despite a slowdown, there are no looming indicators of recession across key global markets.

“What's happened is that economies have proved to be remarkably resilient,” he said. “We're not seeing a global recession, we're not seeing a recession in the United States, we are not seeing recession here in Europe, or indeed in Japan. What we are seeing is a growth slowdown.”

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Martin said the world economy was “holding up”, despite tariff activity out of the US leading to a reorganisation of trade.

There has not been, however, a “big surge in inflation in the States”, he said. “It seems to be quite transitory and that's good news for financial markets.

“That means that interest rates are not going to be going up, it means that growth therefore will probably continue to chug along, and as a result we're seeing equity markets across the globe at record highs. That too is just feeding into a positive story for economic growth.”

Consequence

However, uncertainty around economic conditions in the United States is having an impact on the US labour market, Martin said, which is growing at a “very modest” 30,000 per month average.

“We think that is consistent with a gradual rise in the unemployment rate over time,” he told Insights. “What that means is the Federal Reserve has started to cut interest rates again.”

ANZ Research expects the Fed will cut rates by 25 basis points at each of the next four meetings, taking the target federal funds rate to 3 to 3 ¼ per cent.

“It's going to be good news for borrowers, it's going to be good news for consumers, and it's going to be good news for businesses,” Martin said. “As a consequence, we think the economy is going to avoid recession.”

ANZ Research does expect domestic demand growth in the US to slow into 2026, but not to recessionary levels, Martin noted. By 2027, expect a “very gradual recovery in economic activity”, he said.

Proactive

Martin said Europe was in the middle of a “good growth story”, with the region’s central bank being rewarded for its “proactive” stance on cutting interest rates.

“As soon as inflation showed signs of falling on a sustainable basis 15 months ago, the European Central Bank embarked on a series of interest rate cuts, cutting the key benchmark rate by 200 basis points,” he said. “We're seeing a very positive response to that in the economy.”

In addition, data show a lift in mortgage demand, consumer credit and borrowing among non-financial corporates, Martin noted.

“That's really good news in terms of supplementing the recovery going forward,” he said.

ANZ Research expects euro area growth will rise 1.3 per cent in 2025, compared to 0.8 per cent in the previous year. The bank has pencilled in growth of 1.5 per cent in 2026 and 1.9 per cent in 2027.

“[It’s] really quite an encouraging story for the European economy,” he said.