GLOBAL MACRO
The IMF raised its forecast for 2025 global GDP growth to 3.3%, a tenth higher than the October projection round. This largely reflected a 0.5pp upward revision to US growth expectations to 2.7%, “in part reflecting carryover from 2024 as well as robust labor markets and accelerating investment, among other signs of strength”.
- Eurozone growth expectations were revised two tenths lower to 1.0%, on “weaker-than-expected momentum at the end of 2024, especially in manufacturing, and heightened political and policy uncertainty”. At a country level, there was a 0.5pp downward revision in Germany and 0.3pp in France.
- Chinese growth is projected at 4.6% (vs 4.5% prior), with “carryover from 2024 and the fiscal package announced in November largely offsetting the negative effect on investment from heightened trade policy uncertainty and property market drag”.
- The forecasts “incorporate recent market developments and the impact of heightened trade policy uncertainty, which is assumed to be temporary, with the effects unwinding after about a year, but refrain from making any assumptions about potential policy changes that are currently under public debate”
- As such, protectionist policies are cited as a key risk to the outlook. Ahead of the Trump presidency, “looser fiscal policy in the United States, driven by new expansionary measures such as tax cuts, could boost economic activity in the near term”. However, the longer-run impact “may require a larger fiscal policy adjustment that could become disruptive to markets and the economy”.
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