IN FOCUS6-8 min read
Schroders Economics Lens Q1 2025
Looking for the signal amidst the noise: read more in your chart-pack guide to the global macroeconomic outlook.
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Schroders Economics Lens is a chart-pack guide to the global macroeconomic outlook.
It is published quarterly and illustrates the latest economic forecasts and views from Schroders' economics team. The Lens includes analysis of the outlook for growth, inflation, and interest rates, as well as topical issues.
Click here to download your Q1 copy: Schroders Economics Lens Q1 2025
Summary:
- Global: Trump’s first 100 days may remain very noisy as the administration sets out its key policy objectives. However, the early signs are that key economic policies will be milder than those promised on the campaign trail. This is in line with our baseline assumption, clearing the way for solid global growth of 2.5% in 2025 and 2.8% in 2026.
- US: We expect the strong labour market to support consumption and above-consensus growth. But with inflation likely to remain elevated, the Fed is likely to remain on pause this year and we continue to expect rate hikes in 2026.
- Eurozone: Fading political clouds and looser financial conditions look set to drive a recovery in growth. But sticky inflation and wage growth suggest that the ECB will not be able to cut interest rates much further.
- UK: Supply side constraints limit the scope for faster growth. With inflation set to climb above 3% in the months ahead, we continue to anticipate just one more 25bp cut to leave Bank Rate at 4.25%.
- Japan: The upside surprise in Q4 GDP was driven entirely by net exports. Domestic demand contracted and leading indicators continue to point down. As such, we doubt that inflation will remain high enough for the BoJ to significantly raise rates in 2025.
- China: Despite some improvement in late 2024, we remain pessimistic about the outlook for China. Green shoots of recovery are emerging, but these are unlikely to become evident until much later in the year.
- EM: A challenging external environment, along with high real interest rates and resurgent inflation, cloud the growth outlook. India stands out as a relatively insulated, large EM where interest rate cuts are starting to brighten the outlook.
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