Macroeconomic data published during 2024 have further reinforced our sustained optimism about the post-pandemic recovery. The United States remains at the forefront of growth among developed economies, while globally, the labour market is finding its balance: both the unemployment rate and supply-side indicators, such as new job openings and vacancies, have returned to pre-COVID levels. Inflation is steadily decelerating and aligning with the targets of central banks, many of which have begun a gradual normalisation of interest rate.
As per our 2025 forecast, the policies proposed by the newly elected President Trump are unlikely to have a significant impact on the baseline scenario, at least during the first part of the year: the potential onset of a global tariff war would have later repercussions, only becoming a risk towards the end of 2025. We expect global growth to remain steady at a rate similar to 2024, averaging at 2.6%, slightly above consensus expectations. Our outlook on US growth is more positive than the consensus (2.3% for 2025 against 1.9%) and more cautious for the Eurozone (1.0% compared to the consensus of 1.2%), while forecasting intermediate levels of growth rates for the other major economies. In China, growth prospects will largely depend on the extent of support provided by the authorities and the trade policy decisions made by the Trump administration.
Therefore, we do not expect the outcome of the US elections to halt the ongoing economic policy normalisation, and we expect most major central banks will continue to significantly ease their tight monetary stance.
The Federal Reserve, in particular, is pursuing a disinflationary rate-cutting cycle, and we anticipate an overall reduction of 125 basis points by the end of 2025. However, although the direction is clear, the pace is still uncertain: continued upward surprises in real growth data could fuel concerns about a slowdown in the disinflation process, and a pause in December cannot be ruled out.
On the other side of the Atlantic, the European Central Bank is expected to cut rates by 25 basis points at each meeting until June 2025, bringing the deposit rate to 2%; however, risks that in the second half of the year rates could fall below the neutral level cannot be ruled out, especially if growth weakens more than expected and/or core inflation declines more quickly.
In China, the People's Bank of China is expected to ease monetary policy alongside increased fiscal stimulus to maximise support for the economy. A 50 basis point reduction in the reserve requirement ratio (RRR) and a 20 basis point cut in the reverse repo rate are expected by year-end, with another 50 basis points of RRR cuts and 40 basis points of benchmark lending rate cuts anticipated in 2025.