Financials / Investments
Europe:
Europe’s economy has stabilized after the energy shock triggered by Russia’s invasion of Ukraine. Inflation fell to 2.5% in 2024, down from double-digit highs in 2022, while GDP growth remained subdued at 0.8% for 2024, with projections of 1.3% in 2025. The European Central Bank (ECB) began cutting interest rates in mid-2024 after a period of aggressive hikes, lowering the deposit rate from 4.00% to 3.00% by December 2024, and signaling further easing in 2025 as inflation trends toward its 2% target. However, tight lending conditions and weak private consumption continue to weigh on growth, raising concerns about prolonged stagnation despite falling energy prices and improved supply chains.
Asia:
Geopolitical tensions and regulatory uncertainty in China have accelerated a pivot toward Asia ex-China markets. Emerging Asia excluding China delivered 8.6% returns in 2023, compared to just 1.3% for China, according to MSCI indices. Foreign investors poured $38 billion into Asia ex-China stocks and bonds in 2023, with $22.4 billion in May alone, marking the largest monthly inflow since 2011. India has emerged as the region’s growth engine, driven by its booming technology sector. In 2024, India attracted $13.7 billion in venture capital funding, a 43% increase year-on-year, making it Asia-Pacific’s second-largest VC destination after China. Tech-first sectors—consumer tech, SaaS, and fintech—accounted for over 60% of total funding, with major deals in quick commerce, AI, and electric mobility. Global energy giants like Shell Ventures and BP Ventures are investing heavily in India’s clean-tech startups, reflecting confidence in its transition toward sustainable growth.
Foreign investment in China has sharply declined in recent years. After peaking at $344 billion in 2021, inbound foreign direct investment (FDI) fell to $114.8 billion in 2024, marking a 27% drop year-on-year and the lowest level in decades. This downturn reflects growing investor concerns over China’s restrictive business environment, regulatory unpredictability, and heightened state control over private enterprises. Beijing has attempted to reverse the trend by pledging further market opening and easing some rules, but foreign firms remain cautious due to capital controls, data security laws, and political risks. While China’s economy grew 5.3% in the first quarter of 2024, structural challenges such as property sector stress and weak consumer demand persist, adding to investor uncertainty.
China’s Belt and Road Initiative (BRI), launched in 2013, continues to evolve. Initially criticized for creating “debt traps,” the BRI is now shifting toward smaller, greener, and less risky projects, emphasizing high-quality investment, project finance, and green energy initiatives. However, debt sustainability concerns remain acute: in 2025, 75 developing countries faced $22 billion in BRI-related repayments, raising fears of economic strain and sovereignty risks. Italy, the only G7 country to join the BRI in 2019, formally withdrew in December 2023, citing limited economic benefits and strategic realignment with the EU and the United States. Meanwhile, the U.S. and G7 partners are advancing the Partnership for Global Infrastructure and Investment (PGII) as a counterweight to BRI. PGII aims to mobilize $600 billion by 2027, with the U.S. committing over $60 billion to date and focusing on strategic corridors linking India, the Middle East, and Europe.