Catenaa, Monday, January 06, 2025-Goldman Sachs has outlined its top seven global macroeconomic predictions for 2025, projecting a solid 2.7% global GDP growth driven by easing financial conditions, ongoing interest rate cuts, and a complex geopolitical environment.
The investment bank expects US economic growth to outpace other developed markets, forecasting a 2.4% increase in GDP, supported by robust income growth and continued financial easing. Core inflation is expected to decline to 2.4%, with unemployment dropping to 4% by the end of 2025. Goldman Sachs predicts the Federal Reserve will implement three rate cuts, beginning in March, which will bring the terminal rate to 3.5-3.75%. The bank also expects the Fed to end its balance sheet runoff by the second quarter.
In contrast, Goldman forecasts a slower recovery in the Eurozone, predicting a below-consensus 0.8% GDP growth amid high energy costs and pressures from China. The European Central Bank is expected to cut rates, bringing its policy rate to 1.75% by July.
China’s economy is set for a slowdown, with GDP growth forecast at 4.5%, as policy easing fails to offset weak domestic consumption and higher tariffs. Goldman Sachs also warned of geopolitical risks, particularly involving US -China trade tensions, the Russia-Ukraine war, and Middle East instability, which could disrupt global markets.
Despite these challenges, Goldman Sachs remains optimistic that easing financial conditions and continued rate cuts will bolster global growth in 2025.
