Investing.com – Goldman Sachs has outlined its top seven macroeconomic forecasts for 2025, predicting a year shaped by easing financial conditions, continued rate cuts and geopolitical uncertainties.
The investment bank anticipates divergent growth paths between the United States, the euro area and China, with the United States expected to outperform its developed market peers.
1) Global GDP growth: Goldman Sachs projects solid global real GDP growth of 2.7% year-on-year in 2025, driven by rising real household disposable incomes and easing financial conditions.
The report highlights the role of rate cuts, adding that “US growth is likely to continue to outperform its developed market (DM) peers given its significantly stronger productivity growth.” Core inflation is expected to return to target levels in developed markets by the end of 2025.
2) US Economic Outlook: Goldman expects US GDP growth above the consensus of 2.4% in 2025, citing robust income growth and financial ease. Core PCE inflation is expected to slow to 2.4% by December 2025, “reflecting a further cooling in core inflation and easing wage pressures, but a moderate boost from higher rates.”
The bank also predicts that the unemployment rate will drop to 4% by the end of the year.
3) Federal Reserve Policy: Goldman Sachs anticipates that the Federal Reserve will implement three rate cuts in 2025, with the first 25bp cut coming in March, followed by additional cuts in June and September.
This would have brought the terminal rate to 3.5-3.75%. The bank also expects the Fed to reduce its budget in January and conclude it in the second quarter of 2025.
4) Growth of the Eurozone: Goldman projects below-consensus GDP growth of 0.8% for the euro area, 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 a gradual cooling in services inflation.
5) ECB Policy Outlook: The European Central Bank is expected to proceed with sequential cuts of 25bp, bringing the policy rate to 1.75% from July 2025. However, Goldman notes the potential risks, warning that “quicker and deeper cuts” could be necessary if growth and inflation weaken. in addition.
6) China’s Economic Slowdown: In China, Goldman Sachs predicts that real GDP growth will slow to 4.5% in 2025, as policy measures fail to fully offset weak domestic consumption, market struggles property, and the impact of higher US tariffs.
“In the longer term, we remain cautious on China’s growth prospects given several structural challenges, including demographic deterioration, a multi-year debt deleveraging trend, and shrinking global supply chains,” he said. Wall Street firm.
7) US Politics and Geopolitical Risks: Finally, Goldman advises investors to closely follow US policy changes and geopolitical developments, particularly if Donald Trump secures a second term.
Key risks include higher tariffs on China and autos, lower immigration, tax cuts and regulatory rollbacks.
Goldman warned that while tax cuts could boost growth, “the drag of higher tariffs” could offset those gains, with Europe and China facing bigger economic hits. The report also points out the risks arising from the situation in the Middle East, the Russia-Ukraine war, and US-China relations.
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2025-01-05 11:00:00
