Standard Chartered has projected a slight slowdown in global economic growth for 2025, with expectations of a decrease from 3.2% in 2024 to 3.1%. The forecast suggests that while looser financial conditions and expansionary fiscal policies may provide some support, these could be counterbalanced by protectionist trade measures and high interest rates in the US and other regions.
The recent US election results, which saw President-elect Trump and the Republican party achieve a clean sweep, are anticipated to have significant global repercussions. Their mandate includes implementing substantial tariffs on major trading partners like China. Trump's policies are expected to stimulate growth but also increase inflation within the US, affecting economies worldwide. On geopolitical matters, Trump's promise to end conflicts in Ukraine and the Middle East could have widespread implications.
Despite previous predictions of a recession due to high interest rates, the US economy has remained robust, driven by consumption and services. Standard Chartered anticipates moderate growth for 2025 as consumer spending is capped by a softer labor market and wage growth.
In contrast, the euro-area economy faces challenges with Germany and France at risk of recession. Potential new US tariffs on EU goods could further strain this already fragile region. With exports being crucial for growth and existing pressures from energy costs and competition abroad, Europe's economic outlook remains uncertain. Additionally, changes in US support for Ukraine might force Europe to bear more responsibility for regional stability.
China is preparing for potential impacts from increased US tariffs by boosting domestic stimulus efforts aimed at supporting growth into early 2025. Should severe tariffs be enacted, further stimulus focusing on consumption over investment is expected. Although net exports significantly contributed to China's growth in 2024, they are predicted to decline next year.
Growth across Asia is expected to slow slightly due to monetary tightening and an uncertain economic outlook among key trading partners such as the US, euro area, and China. Nevertheless, ASEAN countries and India should maintain healthy growth levels.
In the Gulf Cooperation Council (GCC) region, despite concerns over energy markets, non-oil sector investments are predicted to drive economic activity beyond global averages in 2025. Lower interest rates may benefit sectors sensitive to rate changes in Saudi Arabia, UAE, and Qatar.
Kaushik Rudra of Standard Chartered noted: “The US economy is set to moderate in 2025 after a resilient performance despite elevated interest rates... we expect the Fed to cut policy rates faster than the market is pricing.” He added that while Asia's overall health remains stable despite slight moderation at regional levels: "For the UK... there is considerable uncertainty on... budget measures [and] Trump’s tariff approach; we hold a below-consensus growth forecast of 1.3% for 2025."