Macroeconomic Outlook Report: Global (Q2 2025 Update)

The analyst has revised its global economic forecast for 2025 in its Q2 2025 update, lowering the projection by 0.26 percentage points to 2.34% compared to the previous Q1 2025 update. This revision is primarily attributed to factors such as the implementation of tariffs, uncertainty in trade policies, rising geopolitical tensions, and persistently high debt levels. The growth forecasts for 2025 have been lowered by 0.62 percentage points (pp) for the Americas, 0.56 pp for the Middle East and Africa, 0.26 pp for Europe, and 0.03 pp for Asia-Pacific in the Q2 2025 update.

Global inflation is expected to decrease to 5.4% by 2025, down from 5.7% in 2024. In 2025, inflation rates are projected to decline in Europe, with estimates of 3.67% compared to 3.93% in 2024. Similarly, in the Middle East and Africa, rates are expected to drop from 19.83% to 14.63%. Conversely, inflation is anticipated to rise in the Americas, increasing from 4.76% in 2024 to 4.79% in 2025, and in the APAC region, where it is projected to rise from 4.29% to 4.41%.

From the end of 2024 until June 2025, the US Federal Reserve maintained its policy rate after implementing two reductions in 2024. In contrast, the European Central Bank (ECB) initiated a series of rate cuts, reducing rates eight times since June 2024. The most recent cut occurred in June 2025, when the rate was lowered by 25 basis points to 2.15%. Several other countries also adjusted their rates from the beginning of 2025 to June 2025: China reduced its rate by 10 basis points, India by 100 basis points, Canada by 25 basis points, Russia by 100 basis points, and South Korea and Australia by 50 basis points each.

Business and consumer sentiment across major economic groupings, including the G7, G20, and EU, declined in the first four months of 2025, compared to the previous quarter. This downturn is primarily attributed to the impact of US tariffs, which have increased costs for both businesses and consumers. Uncertainty surrounding trade policies has exacerbated concerns, leading to reduced investment and spending. From January to April 2025, business confidence fell by 0.16% in the EU27, 0.08% in the G20, and 0.03% in the G7. Consumer confidence also decreased, with the EU27 down by 0.03%, while the G20 and G7 saw a decline of 0.48% and 1.09%, respectively.

In the first quarter of 2025, G20 merchandise trade experienced positive growth, with exports increasing by 2.0% and imports by 3.1% compared to the corresponding period of the previous year. The EU made a significant contribution to the growth in exports, while the US led the rise in imports with a notable 19.0% increase, driven by higher purchases of industrial supplies and pharmaceuticals, partly due to anticipated new tariffs. Overall, North America performed strongly, with Canada reporting a 4.1% increase in exports, particularly in motor vehicles and energy products.

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.