Goldman Sachs releases seven global macroeconomic forecasts for 2025 from Investing.com
Investing.com – Goldman Sachs has laid out its top seven macroeconomic forecasts for 2025, predicting a year marked by easing financial conditions, continued interest rate cuts and geopolitical uncertainty.
The investment bank expects different growth trajectories between the US, the euro zone and China, with the US expected to outperform its developed market peers.
1) Global GDP growth: Goldman Sachs forecasts solid global real GDP growth of 2.7% year-on-year in 2025, driven by rising real disposable household incomes and looser financial conditions.
The report highlights the role of interest rate cuts, adding that “U.S. growth will likely continue to grow faster than its developed market peers given significantly stronger productivity growth.” Core inflation in all developed markets is expected to rise by the end will return to the target level in 2025.
2) US economic outlook: Goldman expects above-consensus U.S. GDP growth of 2.4% in 2025, citing robust income growth and financial easing. Core PCE inflation is forecast to slow to 2.4% by December 2025, “reflecting a further cooling in protective inflation and easing wage pressures, but also a moderate boost from higher tariffs.”
The bank also forecasts that the unemployment rate will fall to 4% by the end of the year.
3) Federal Reserve policy: Goldman Sachs expects the Federal Reserve to make three interest rate cuts in 2025, with the first 25 basis point cut coming in March, followed by further cuts in June and September.
This would bring the final rate to 3.5-3.75%. The bank also expects the Fed to slow its balance sheet reduction in January and complete it by the second quarter of 2025.
4) Growth in the euro area: Goldman forecasts euro area GDP growth of 0.8%, below consensus, reflecting “ongoing structural headwinds in manufacturing” 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 fall back to 2% by the end of the year, with service sector inflation gradually cooling.
5) ECB policy outlook: The European Central Bank is expected to make sequential rate cuts of 25 basis points to bring the key rate to 1.75% by July 2025. However, Goldman flags potential downside risks, warning that “faster and deeper cuts” may be needed if growth and inflation continue to weaken.
6) China’s economic downturn: In China, Goldman Sachs forecasts real GDP growth will slow to 4.5% in 2025 as policy easing measures fail to fully offset weak domestic consumption, housing market woes and the impact of higher US tariffs .
“Longer term, we remain cautious about China’s growth prospects given several structural challenges, including worsening demographics, a multi-year deleveraging trend and de-risking the global supply chain,” the Wall Street firm noted.
7) US politics and geopolitical risks: Finally, Goldman advises investors to closely monitor political changes and geopolitical developments in the US, especially if Donald Trump secures a second term.
Key risks include higher tariffs on China and autos, lower immigration, tax cuts and regulatory rollbacks.
Goldman warns that while tax cuts could boost growth, the “burden of higher tariffs” could offset those gains as Europe and China face greater economic impacts. The report also points to risks arising from the situation in the Middle East, the Russia-Ukraine war and US-China relations.
