Investing.com — Goldman Sachs updated its economic outlook to reflect subtle changes in monetary policy expectations and global growth trends for 2025.
Analysts have revised their policy outlook for the U.S. Federal Reserve, canceling a previously expected interest rate cut in January.
The final interest rate is now expected to fall within the 3.5-3.75% range, compared to the previous estimate of 3.25-3.5%. The brokerage expects the next 25 basis point cut in March, followed by further cuts in June and September.
The United States’ economic performance is expected to continue to outperform developed markets, driven by robust real income growth and strong productivity gains.
Goldman Sachs predicted that the U.S. real gross domestic product (GDP) growth rate in 2025 will be 2.6% compared to the previous year, and the unemployment rate will gradually decline until the end of the year, reaching 4.0%.
Core inflation is expected to ease to 2.4% by December due to lower shelter costs and wage pressures, despite upward pressure from tariff adjustments.
Globally, Goldman Sachs forecasts annual real GDP growth of 2.7%, driven by rising disposable income and easing financial conditions. However, structural problems in the eurozone and China could weaken momentum.
Real GDP growth in the euro area is forecast at a modest 0.8%, constrained by high energy costs, competitive pressures from China and fiscal consolidation.
The European Central Bank (ECB) is expected to continue cutting interest rates until mid-2025, potentially reaching its policy rate of 1.75%.
In China, despite recent policy easing, the outlook remains cautious. Real GDP growth is expected to slow to 4.5% in 2025 due to weakening consumer demand, difficulties in the real estate sector, and rising US tariffs.
Long-term risks are amplified by adverse demographics and the global trend of supply chain diversification away from China.
Geopolitical developments, including US tariff policy under the new administration and ongoing uncertainty in the Middle East and Ukraine, remain important factors to monitor.
Analysts say sweeping tariffs, if implemented, are likely to have a major impact on the European and Chinese economies.
This update highlights a complex global economic environment where growth opportunities are tempered by ongoing structural challenges and geopolitical uncertainty.
