Investing.com – Goldman Sachs updated its economic forecasts, reflecting subtle shifts in monetary policy expectations and global growth trends for 2025.
Analysts revised their outlook for US Federal Reserve policy, omitting a previously expected interest rate cut in January.
The final rate is now expected to fall within a range of 3.5-3.75%, compared to previous estimates of 3.25-3.5%. The brokerage expects the next cut of 25 basis points to take place in March, followed by additional cuts in June and September.
US economic performance is expected to continue to outperform its developed market counterparts, supported by strong real income growth and superior productivity gains.
Goldman expects US real GDP to grow by 2.6% on an annual basis in 2025, along with a gradual decline in the unemployment rate to 4.0% by the end of the year.
Core inflation is expected to ease to 2.4% by December, driven by lower shelter costs and wage pressures, despite upward pressures from tariff adjustments.
Globally, Goldman Sachs expects year-on-year real GDP growth at 2.7%, supported by increases in household disposable income and easing financial conditions. However, structural issues in the Eurozone and China could dampen momentum.
In the euro area, real GDP growth is expected to be a modest 0.8%, constrained by rising energy costs, competitive pressures from China, and fiscal consolidation.
The European Central Bank is expected to continue interest rate cuts until mid-2025, potentially reaching a policy rate of 1.75%.
In China, the outlook remains cautious despite recent policy easing. Real GDP growth is expected to slow to 4.5% in 2025 due to weak consumer demand, challenges in the real estate sector, and higher US tariffs.
Long-term risks are exacerbated by unfavorable demographics and a global trend to diversify the supply chain away from China.
Geopolitical developments, including US tariff policies under the new administration and ongoing uncertainties in the Middle East and Ukraine, remain critical factors to monitor.
Analysts point to the potential for significant impacts on the European and Chinese economies if comprehensive tariffs are implemented.
The updates highlight a complex global economic environment where growth opportunities are weakened by persistent structural challenges and geopolitical uncertainties.
