iBanFirst, a provider of foreign exchange and international payment services for businesses, authorized to operate throughout the European Union, has released the FX Market Outlook 2025 report with the aim to help companies better understand and manage currency risks in the coming year.

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 Market volatility will remain high

Central banks are adjusting their monetary policies based on economic indicators such as inflation, economic growth, and employment, rather than on a fixed schedule. While this approach appears positive, it also brings high volatility to the currency market, which can lead to sharp exchange rate fluctuations, complicating companies’ financial planning and forecasting. Analysts also predict that interest rate cuts in 2025 will be more moderate than in previous easing cycles, as the absence of a recession does not require drastic measures.

Attacks on international trade are on the rise

Free trade is increasingly impacted by protectionist policies, economic boycotts, and obstacles in securing essential trade routes. Approximately one-third of the world’s countries, including 60% of developing nations, are under economic sanctions imposed by the United States. Blockages in key trade points, such as the Formosa Strait, where China and Taiwan are in conflict, or the Bab El Mandeb Strait in the Red Sea, affected by regional conflicts, pose major risks to global economic growth. To mitigate these challenges, companies can diversify their trading partners and enhance their internal expertise in managing geopolitical risks.

Euro area grows slowly but developed economies not at risk of recession

The Eurozone is experiencing modest growth, around 1%, due to limited flexibility in monetary policy and stagnation in Germany, a pillar of the European economy. This situation could negatively impact exports of CEE-based companies in European markets. However, analysts consider a recession in developed economies unlikely, as real wage growth, the gradual easing of restrictive monetary policies, and expansionary fiscal policies, particularly in the U.S., support global economic activity. The U.S. is expected to outpace global growth rates in the coming years.