Investing.com – Goldman Sachs has outlined its top seven macroeconomic predictions for 2025, forecasting a year marked by easing financial conditions, continued rate cuts and geopolitical uncertainties.
The investment bank anticipates divergent growth trajectories between the United States, the euro zone and China, with the United States expected to outperform its developed market peers.
1) Global GDP growth: Goldman Sachs projects strong global real GDP growth of 2.7% year-on-year in 2025, driven by rising real household disposable income and easing financial conditions.
The report highlights the role of rate cuts, adding that “US growth is likely to continue outpacing its developed market (DM) peers, given its significantly stronger productivity growth.” Core inflation is expected to return to target levels in all developed markets by the end of 2025.
2) US Economic Outlook: Goldman expects above-consensus US GDP growth of 2.4% in 2025, citing strong income growth and financial easing. Core PCE inflation is expected to slow to 2.4% by December 2025, “reflecting a further cooling in housing inflation and easing wage pressures, but a moderate boost due to higher tariffs.” high.”
The bank also predicts that the unemployment rate will fall to 4% by the end of the year.
3) Federal Reserve Policy: Goldman Sachs forecasts the Federal Reserve will implement three rate cuts in 2025, with the first 25 basis point cut coming in March, followed by additional cuts in June and September.
This would bring the terminal rate to 3.5-3.75%. The bank also expects the Fed to reduce its balance sheet liquidation in January and conclude it in the second quarter of 2025.
4) Eurozone growth: Goldman projects lower-than-consensus GDP growth of 0.8% for the euro zone, reflecting “continued structural headwinds in the manufacturing sector” due to high energy prices and competitive pressure from China.
Fiscal tightening and trade policy uncertainties are expected to weigh on growth. Inflation is expected to return to 2% by the end of the year, with services inflation gradually cooling.
5) ECB policy outlook: The European Central Bank is expected to proceed with sequential cuts of 25 basis points, bringing the policy rate to 1.75% by July 2025. However, Goldman flags potential downside risks and warns that “cuts” could be necessary. faster and deeper” if growth and inflation weaken. further.
6) China’s economic slowdown: In China, Goldman Sachs predicts real GDP growth will slow to 4.5% in 2025 as policy easing measures fail to fully offset weak domestic consumption, housing market difficulties and the impact of the highest tariffs in the United States.
“Long-term, we remain cautious about China’s growth prospects, given several structural challenges, including demographic deterioration, a multi-year debt deleveraging trend and de-risking in the global supply chain,” it noted. the Wall Street firm.
7) US politics and geopolitical risks: Finally, Goldman advises investors to closely monitor changes in US policies and geopolitical developments, especially if Donald Trump wins a second term.
Key risks include higher tariffs on China and cars, lower immigration, tax cuts and regulatory rollbacks.
Goldman warns that while tax cuts could boost growth, “the drag of higher tariffs” could offset those gains, and Europe and China would face larger economic impacts. The report also points out risks arising from the situation in the Middle East, the war between Russia and Ukraine and relations between the United States and China.