BlackRock, the world’s largest asset manager, has published its 2025 Midyear Global Outlook, outlining a recalibrated investment strategy for a global economy undergoing structural transformation.
The report highlights elevated market uncertainty, driven largely by shifting U.S. policy and the weakening of traditional macroeconomic anchors that have guided asset allocation for decades.
Twice a year, BlackRock’s senior investment professionals gather at its Investment Forum to debate the outlook for the economy and financial markets. This midyear update reflects a period of intensified internal discussion, particularly in light of the turbulent macro environment that has unfolded in the first half of 2025.
The central message: While uncertainty has become a defining feature of the current investment landscape, it is also a period rich with opportunity. Traditional long-term signals, such as stable inflation targets or reliable government debt dynamics, have become less predictive. Instead, mega forces — structural drivers like artificial intelligence (AI) and energy transition — are emerging as new anchors for long-term return potential.
Read: Global economy could slow to 2.3 percent on escalating trade tensions, says UNCTAD
Key investment themes
The report is structured around three core investment themes, each addressing a different facet of the current environment:
1. Investing in the Here and Now
BlackRock emphasizes greater clarity in short-term economic signals compared to the long-term outlook. In this unusual macro regime, the firm maintains a pro-risk stance, particularly favoring U.S. equities and AI-related themes. With long-term outcomes clouded by policy volatility and global uncertainty, the focus has shifted to seizing opportunities available today.
This nimble approach was exemplified earlier in the year when BlackRock quickly re-engaged with risk assets just one week after the April 2 U.S. tariff announcements, underlining a high-conviction, tactical strategy.
2. Taking Risk Without a Macro Anchor
In a world where long-term macro indicators are unreliable, managing risk becomes more nuanced. BlackRock argues that the current macro environment — marked by flux and fragmentation — can actually foster alpha generation, provided risk is actively and intelligently managed.
BlackRock believes this era offers better opportunities than the relatively static conditions of the past decade. However, without firm macro anchors like stable inflation or consistent monetary policy, investors must remain vigilant and flexible.
3. Finding Anchors in Mega Forces
With traditional macro anchors weakened, structural forces are stepping into the foreground. Technologies such as artificial intelligence, demographic shifts, and climate-related investments are now seen as long-term return drivers. However, BlackRock warns these forces don’t easily translate into broad asset class performance and require a granular, theme-based approach across asset classes.
Rather than mapping neatly onto inflation or GDP forecasts, these mega forces demand constant reassessment. Tracking their development, pricing, and implementation is now essential for strategic portfolio construction.
The evolving macro regime
BlackRock reiterates its view that the global economy is in the midst of a profound shift — one that involves not a rupture, but a reformation of investment dynamics.
Policymakers are increasingly limited in their ability to reshape global economics overnight. Despite attempts at dramatic intervention, fundamental constraints, such as trade balances and debt servicing realities, still apply.
While concerns have grown over the future role of U.S. Treasuries and the dollar in global markets, BlackRock maintains a cautiously optimistic view on U.S. assets. Conversely, Europe is seen as needing deeper structural reforms before it can stage sustainable outperformance, although some progress has been noted.
Tactical conviction amid volatility
Despite significant policy noise in the first half of 2025, returns on risk assets have remained largely steady. According to BlackRock, this reflects the underlying resilience of the new macro regime, where short-term clarity allows for tactical positioning, even in the face of structural uncertainty.
The outlook suggests that investors who can adapt their frameworks, shifting from reliance on long-term economic models to a more dynamic, theme-based approach, are best positioned to succeed.
Regional issues
“As mega forces drive a global transformation, the Middle East finds itself at the intersection of three in particular: Geopolitical fragmentation, the energy transition and artificial intelligence (AI). We believe investors can look to mega forces for durable returns as a global economic transformation leaves them without traditional long-term macro anchors,” said Ben Powell, chief APAC & Middle East investment strategist, BlackRock Investment Institute.
The Middle East is both a source of capital and a destination for long-term investment. Governments like Saudi Arabia’s are channeling decades of oil wealth toward economic diversification. Domestic and global capital is increasingly targeting infrastructure, energy, and innovation in the region. Yet geopolitical flare-ups and oil price volatility remain key risks, Powell believed.
