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Schroders Economics Lens Q4 2024
Making America exceptional, again: 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 Q4 copy: Schroders Economics Lens Q4 2024
Summary:
- US exceptionalism has been the key driver of global financial markets in recent years, and our forecasts imply that the ‘Trump trade’ will deliver even more outperformance in the months ahead.
- We anticipate global growth in the region of 2.5-3% over the next couple of years. We have nudged down our forecast for GDP growth in 2025 to 2.6%, from 2.7% previously, but expect looser financial conditions to drive a rebound to 2.8% in 2026.
- We continue to view consensus expectations for the US economy as too pessimistic. The consumer is in good shape, while we believe the Trump administration’s pro-growth policies, along with relatively mild supply side measures, will boost growth to around 2.5% in 2025, with a further acceleration to 2.7% in 2026. Faster growth is likely to ensure that inflation remains higher than we previously assumed and that, after some more near-term easing, the Federal Reserve’s focus will eventually turn to rate hikes in 2026.
- The eurozone and UK should show some improvement over the next couple of years, but growth of 1-1.5% will pale into insignificance compared to what is happening on the other side of the Atlantic. Both the European Central Bank and Bank of England have a clear easing bias, but sticky inflation may frustrate policymakers and stunt recoveries.
- We have cut our forecast for GDP growth in China to just 4% in 2025, with only a mild rebound anticipated in 2026. Exports were already set to roll over before the election of Trump, while domestic demand shows little sign of taking up the slack. The government’s reluctance to stimulate domestic demand through fiscal policy means that downward cyclical pressure on growth is unlikely to abate until the second half of 2025.
- There is clearly a substantial risk that Trump’s policies will be far more aggressive than we assume, miring the US economy in stagflation and tipping the rest of the world towards recession that would widen the macroeconomic divergences even further.
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