EIOPA's insurance risk dashboard shows overall stability amidst persistent geopolitical tensions

The macroeconomic environment remains stable at a medium level, supported by continued GDP growth, easing inflation. 

However, persistent and widening geopolitical tensions—most notably involving Venezuela, Iran, and emerging frictions around Greenland—are increasing uncertainty and rendering the outlook for trade, energy, and security increasingly complicated. At the same time, higher public spending needs, particularly for defence and infrastructure, may constrain fiscal space over the medium term.

Financial markets remain vulnerable to valuation pressures, with indicators continuing to point to potential detachment from fundamentals. While recent increases in volatility have been contained, the potential unwinding of an AI-related asset price bubble could amplify market fluctuations, even if this does not immediately translate into higher default risk.

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