Global Economic Forecasts at a Glance

The global economy is navigating a period of 'US trade chaos' and shifting demographics, but resilient labor markets and European fiscal stimulus support a moderate outlook. Central banks are diverging, with the Fed/BoE nearing end-cycle cuts while the BoJ tightens.

Key Takeaways

• 1.Global growth remains resilient despite a 'trade war' shock from the new US administration's import tariffs and immigration crackdowns.
• 2.US trend growth has been lowered from 2.0% to 1.5% due to immigration crackdowns, tariffs, and institutional erosion.
• 3.The Eurozone recovery is gaining momentum, particularly in Germany due to fiscal stimulus, with growth expected to peak in 2027.

Table of Contents

• Global outlook: resilient growth despite trade war damage
• Forecast changes
• US: Trump’s policies dampen the fireworks
• China: serious challenges after years of capital misallocation
• Japan: policy normalisation
• UK: weak consumption puts end to high inflation
• Eurozone: US tariffs hurt, domestic policies support recovery
• Germany: big fiscal boost
• France: political uncertainty and a risk of reform reversals
• Italy: modest reforms and a fiscal boost support growth
• Spain: following through on significant catch-up potential
• Portugal: rapid – but volatile – growth
• Key financial forecasts

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