2025 Outlook

The IMF and the World Bank predict steady global economic growth of between 2.7 and 3.3 percent in 2025, which is broadly in line with growth rates in 2024.2223 Emerging markets (excl. China) are expected to grow at 3.8 percent in 2025, up from 3.5 percent in 2024. Global inflation has been steadily declining in 2024 and this trend is expected to continue in 2025. Inflation is predicted to reach its lowest levels since the peak in 2022.

The global growth averages conceal regional differences in growth outlooks within FMO’s markets. Growth is somewhat weakening in Europe and Central Asia, while it is strengthening in Africa, Latin America, and South Asia compared to 2024.

Growth in low-income countries is expected to accelerate significantly in 2025, reaching 5.8 percent compared to 3.6 percent in 2024. This projection assumes that the impact of major conflicts will ease this year. Key drivers supporting this growth outlook include falling interest rates, recovering real incomes, increasing consumer confidence, and expanding trade and industrial activity.

Both the IMF and the World Bank note that despite this relatively positive outlook, substantial uncertainties could affect economic development. In particular, the potential unravelling of restrictive trade policies by advanced economies is expected to disproportionately impact emerging economies. The Economist notes that a further decoupling of American-led and China-led trading blocs would result in a permanent 4 percent decline in GDP for Sub-Saharan African countries, the most severe impact among all regions.24 Overall, rising geopolitical tensions and escalating conflicts pose a threat and could negatively impact trade and commodity markets.

Finally, with global warming reaching record levels, the year ahead could be significantly impacted by disasters of uncertain but generally increasing magnitude. These challenges may limit financing opportunities by raising costs and uncertainty. However, they also highlight the crucial role of DFIs like FMO in supporting sustainable development, promoting stability, and providing climate mitigation and adaptation solutions, especially when private investment is constrained.

Priorities in 2025

In 2025, FMO will continue to focus on the following three priorities: growing impactful business, improving our capabilities and ensuring FMO’s foundation is solid. More specifically, we will focus on strengthening our course towards our 2030 strategic ambitions. We are also aiming for strong production to further build up our RI- and Green-labelled total committed portfolios. Simultaneously, we aim to maintain the size of our private equity portfolio from 2024 to 2025 while increasing its returns. We also seek to enhance the growth and returns of debt investments on our own balance sheet and improve organizational efficiency. To achieve these goals, we will build on our strong performance in 2024.

We will continue to invest in our people, systems and processes to respond to the increasing complexity resulting from regulatory and supervisory requirements, stakeholder expectations, and evolving impact management standards. Other factors that may affect our 2025 financial performance include uncertainty around economic developments with the start of the new presidency in the US, ongoing geopolitical conflicts that may affect the fair value of our private equity portfolio, and unpredictability around how the US dollar exchange rate will develop. During the year, we will closely monitor our financial performance and make budgetary adjustments where needed.

Growing impactful business 

In a volatile global landscape, FMO faces three key long-term challenges: a scarcity of investment-ready companies, limited availability of concessional funding, and increasing regulatory requirements. However, as these challenging times also call for steadfast action, we remain firmly committed to our 2030 ambitions: €10 billion in Green investments and €10 billion in RI investments.

In 2025, to stay on track towards these ambitions, we will prioritize increasing our new investments towards Reduced Inequalities (SDG 10) by leveraging FMO’s own capital, as well as funds from public entities (public funds) and third parties (direct mobilized funds), particularly in least developed countries.

Additionally, we will increase our investments in financial institutions in emerging markets, which have the local network and knowledge to play a key role in reducing inequalities within countries and supporting real climate action on the ground. We will also continue to develop bankable opportunities through the Market Creation initiative, one of the ten meaningful innovations outlined in our 2030 Strategy.  

Improving our capabilities 

To help grow our impactful business, we will focus on improving FMO’s organizational capabilities, particularly in efficiency and people and needed skills. We aim to achieve efficiency gains by facilitating increased productivity of our current workforce and adopting a more measured approach to staff growth compared to recent years. This will involve optimizing and digitizing selected investment and key support processes. Additionally, we will drive ongoing efficiency improvements through bottom-up initiatives from teams across FMO.

Our people remain a key priority. By strengthening leadership capabilities through the Leadership Impact Program and fostering a collaborative culture, we aim to enhance employee engagement and maximize our collective impact as One FMO.

Ensuring FMO's foundation is solid

Ensuring we continue to have a solid foundation remains a priority, as this is a prerequisite of our license to operate. In 2025, we will in particular focus on increasing income growth while limiting staff and other expenses to ensure our long-term financial health. We will also closely monitor the effectiveness of adopted interventions to keep the Total Capital Ratio (TCR) outlook above the alert level in the years running up to 2030. Moreover, we will continue to ensure regulatory compliance by adapting to regulatory changes and further enhancing risk processes. And finally, we will sustain and further strengthen our risk awareness.