Budget guide 2025 – Guide to corporate financial exposure

Welcome to budget guide 2025

As we head into an autumn that looks set to be characterised by central bank rate cuts and continued macroeconomic and geopolitical uncertainty, we at Danske Bank Research present the Danske Bank Budget Guide 2025. The Budget Guide includes our outlook on the global economy, as well as fixed income and FX markets, for the year ahead.

We extend our forecasts until the end of 2025 and seek to answer a number of questions that companies will likely face in the coming months:

• What is the outlook for the global economy?

• How are key export markets doing?

• How should companies hedge their liabilities?

• How should companies hedge FX exposure?

Budget Guide 2025 is intended as a quick reference guide to help facilitate EUR-based companies' 2025 budget planning. With this in mind, we present three scenarios for the global economy in general and the USD in particular.

Baseline scenario – Normalising economies (50% probability)

Economic growth, inflation, unemployment rates and interest rates have, to varying degrees, moved towards normal levels in the US, the euro area, and the Nordic countries, following the extremes of COVID and high inflation. We expect this process to continue, which implies higher growth in Europe and most Nordic countries, and slightly lower growth in the US. Labour markets should become slightly less tight, and rising real incomes should support European consumer spending. Lower interest rates should be a modest support for construction and investment. • High interest rates have been instrumental in fighting inflation, but now the time has come to lower them. The US has a higher starting point than the euro area, and US inflation is more clearly under control, so we expect the Federal Reserve to move faster. All central banks are however expected to be cautious and respond to data.

The Chinese economy continues to struggle with a housing crisis and weak private consumption. Growth is held up by stimulus and a moderate improvement in exports. We look for more of the same in 2025 with growth just below 5%. This is a negative factor for many European businesses with large sales in China.

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