Global Economic Forecasts

The global outlook is clouded by the Iran conflict and protectionist US policies, leading to a temporary slowdown in growth. While resilience remains in labor markets, structural issues in China and Europe limit recovery potential.

Key Takeaways

• 1.The Iran war is casting a dark shadow over the global economic outlook, slowing growth and raising inflation due to higher energy prices.
• 2.US trade policy and protectionism (tariffs, immigration restrictions) are dampening domestic growth potential.
• 3.China is struggling with long-term structural issues, including capital misallocation, that will limit its capacity to act as a global growth engine.

Table of Contents

• Global outlook: temporary Iran war damage
• Forecast changes
• US: Trump’s policies dampen the fireworks
• China: serious challenges after years of capital misallocation
• Japan: policy normalisation
• UK: disinflation delayed
• Eurozone: Iran war and US tariffs hurt, domestic policies support growth
• Germany: big fiscal boost
• France: political uncertainty and a risk of reform reversals
• Italy: modest reforms and a fiscal boost support domestic demand
• Spain: following through on significant catch-up potential
• Portugal: rapid – but volatile – growth