Investing.com – Goldman Sachs released its top 7 macroeconomic forecasts for 2025, predicting a year shaped by easing financial conditions, continued rate cuts and geopolitical uncertainty.
The investment bank expects divergent growth paths between the US, the eurozone and China, with the US expected to outperform its developed market peers.
1) Global GDP growthGoldman Sachs forecasts solid global real GDP growth of 2.7% over 2025, driven by rising real disposable household incomes and easing financial conditions.
The report highlights the role of rate cuts, adding that “US growth is likely to continue to outpace 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 prospects: Goldman expects US GDP to grow above consensus by 2.4% in 2025, citing strong income growth and fiscal easing. Core PCE inflation is forecast to slow to 2.4% by December 2025, “reflecting a further cooling of shelter inflation and an easing of wage pressures, but a modest increase in higher rates.”
The bank also predicts that the unemployment rate will drop to 4% by the end of the year.
3) Federal Reserve policyGoldman Sachs predicts the Federal Reserve will make three rate cuts in 2025, with the first 25 bp cut coming in March, followed by additional cuts in June and September.
This will result in a terminal rate of 3.5-3.75%. The bank also expects the Fed to reduce balance sheet outflows in January and end it in the second quarter of 2025.
4) Euro zone growth: Goldman projects a below-consensus GDP growth of 0.8% in the eurozone, reflecting “continued structural headwinds in the manufacturing sector” due to high energy prices and competitive pressure from China.
Fiscal tightening and trade policy uncertainty are expected to weigh on growth. Inflation will return to 2% by the end of the year, with a gradual decline in services inflation.
5) ECB Policy Outlook: The European Central Bank is expected to continue its sequential rate cuts of 25 bp, bringing the policy rate to 1.75% by July 2025. However, Goldman notes potential downside risks, warning that “faster and deeper tapering” may be needed if growth and inflation weaken. Further.
6) China’s economic slowdownIn China, Goldman Sachs forecasts that real GDP growth will slow to 4.5% in 2025 as policy easing measures fail to fully offset weak domestic consumption, a struggling property market and the impact of higher US tariffs.
“Longer term, we are cautious about China’s growth outlook given several structural challenges, including worsening demographics, a multi-year debt deleveraging trend, and shrinking global supply chains,” Wall notes. Street firm.
7) US politics and geopolitical risks: Finally, Goldman advises investors to closely monitor US policy changes 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 rolling back regulations.
Goldman warns that while tax cuts could boost growth, “the drag of high tariffs” could reverse those gains, leaving Europe and China facing bigger economic shocks. The report also notes the risks of the situation in the Middle East, the Russia-Ukraine war, and US-China relations.