Macroeconomic Outlook Report: Global (Q1 2025 Update)

The analyst has slightly adjusted its 2025 global economic forecast in its Q1 2025 update, increasing it by 0.05 percentage points to 2.60% compared to the previous update in Q4 2024. The revision is attributed to factors such as lower inflation, advancements in technology, and changes in monetary policy. However, risks such as geopolitical tensions, trade policy uncertainty, and high debt levels remain. Growth projections for 2025 have increased by 0.25 percentage points (pp) for the Americas and 0.08 pp for the Middle East and Africa but decreased by 0.08 pp for Europe and 0.02 pp for Asia-Pacific in the Q1 2025 update.

Global inflation is projected to ease to 3.62% by 2025 from 4.40% in 2024. In 2025, inflation rates are expected to decline across all regions: the Americas (excluding Argentina and Venezuela) to 4.39% from 4.85% in 2024, Asia-Pacific to 4.33% from 4.57%, Europe to 3.41% from 4.21%, and the Middle East and Africa to 14.25% from 20.8%.

In February 2025, US President Donald Trump announced significant tariff measures, including a 25% tariff on steel and aluminum imports, as well as future tariffs on auto, semiconductor, and pharmaceutical imports. These actions have led to global trade tensions, financial market turmoil, and retaliatory measures from China, Canada, and Mexico. The WTO has cautioned that these actions could result in a prolonged trade war and slower global economic growth. Stock indices have declined, oil prices have risen, and the US dollar has strengthened as a result.

In early 2025, European stocks outperformed Wall Street, driven by fund inflows and policy hopes. US markets face mixed signals due to geopolitical tensions and inflation risks. Indian markets struggle with FII outflows but benefit from domestic factors. While global uncertainties persist, resilient GDP growth and policy stability offer long-term potential. Investors should remain diversified and monitor trade policies, interest rates, and economic conditions for opportunities amid market volatility.

Key Highlights

As of February 2025, 10 out of the 11 G10 nations have implemented policy rate cuts in response to easing inflation. The Swiss National Bank (SNB) has lowered rates four times, totaling 125 basis points (bps), while the Bank of Canada (BoC) has implemented its sixth rate cut, bringing rates down to 3.00% in January 2025. The Riksbank in Sweden has made six cuts, reducing rates to 2.25% by January 2025. The European Central Bank (ECB) has trimmed rates five times, reaching 2.9% in January 2025. The US Federal Reserve has cut rates three times, totaling 100 bps by January 2025, and the Bank of England (BoE) has reduced rates three times, reaching 4.50% in February 2025.

Scope

• The analyst's Global Macroeconomic Outlook Report identifies, analyzes, and forecasts key development of the global economy. The report provides a 360-degree view of the economy which can be used as a strategic tool to understand market dynamics, business potential and direction of operations.

Reasons to Buy

• Comprehensive Insights: Offers a detailed analysis of global economic trends, including growth projections, inflation, and policy shifts across major regions and countries.
• Data-Driven Forecasts: Includes robust data on economic performance indicators, helping businesses and investors make informed decisions for 2024 and beyond.
• Regional Comparisons: Provides comparative analysis of economic prospects across the Americas, Europe, APAC, and MEA
• Expert Analysis: Features expert commentary on key factors shaping the global economy, such as geopolitical developments, trade dynamics, and fiscal policies.