Economic Forecast For 2025: A Global Economic Outlook

These pressures are set to impact consumer spending, healthcare costs, and other nationwide economic markers in the coming years. The commodity markets are poised for significant shifts influenced by geopolitical developments, economic policies and global demand dynamics. Innovating to zero solutions, in turn, urges companies to rethink their strategies and operations. This transformative approach not only aligns with ecological goals but also propels businesses toward innovative, sustainable growth. The ‘innovating to zero’ philosophy marks a pivotal shift for businesses in how economies operate, products are designed and used, and energy is generated and consumed. As momentum builds, it opens fresh avenues for investment, collaboration, and creativity.

Slow economic growth will likely continue in Canada in 2025 as significant policy shocks threaten to reshape the landscape. Global use of digital identity systems would enable safe and dependable identification of people everywhere. This advancement will improve security while safeguarding privacy by making it easier to access banking systems, government services, and international travel. It will also open doors to social and economic advantages, especially in areas where residents do not have a formal identity. In addition to enhancing air quality, the change will accelerate advancements in battery technology and the use of renewable energy sources.

• The plant collects CO2 from various sources and features remote monitoring and control options, enabling real-time performance tracking and control.
• As these developing economies assert their influence, stakeholders across the spectrum must strategically navigate the evolving global order.
• This significant boost to spending, funded by issuance of debt, is meant to stimulate economic activity.
• Consumer sentiment can be influenced by emotional factors unrelated to the economy.

There is a widening gap and increasing fragmentation in the geopolitical, economic, social, and digital domains. Moreover, this tendency challenges the idea of a single global community by reflecting a global environment. It is characterized by rising nationalism, protectionism, digital polarization, and socioeconomic inequality.

We combine macro insights with industry expertise to support strategic decision-making across market cycles. After declining roughly 10% through the first half of 2025, the dollar stabilized and traded in a relatively tight band over the past several months. U.S. economic resilience relative to other major economies should provide a key support for the dollar in 2026, balancing the foreign exchange headwinds of lower interest rates and improved growth outlook in Europe.

Expenditures decreased $24.9 billion, or 14.2 percent, from $176.0 billion (revised) in 2023 and were below the annual average of $277.2 billion for 2014–2023. As in previous years, acquisitions of existing U.S. businesses accounted for most of the expenditures. We believe India’s growth rate has now normalised and activity will expand at a softer pace in 2025.

If China reduced its savings, it would import more and have a lower trade surplus. Meanwhile, China’s imports grew modestly in November, up 1.9% from a year earlier. Imports from the United States were down 13.2%, likely because of declining imports of inputs needed to produce exports to the country. At the same time, imports were down modestly from ASEAN and the European Union.

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The latter two categories contributed to China’s growing production of high-tech products. In November, China’s exports (denominated in US dollars) were up 5.9% from a year earlier, hitting the highest level in eleven months. Exports were up 4.3% to Japan, up 12.8% to Taiwan, up 35.8% to Australia, up 14.8% to the European Union, and up 8.2% to ASEAN (Southeast Asia). Although the United States and China have reached a temporary agreement on trade, the deal leaves in place very high US tariffs on imports from China.

This, in turn, has contributed to higher bond yields in the United States and Germany as Japanese demand for foreign bonds has diminished. As such, a further tightening of Japanese monetary policy could have global implications. Now, with steeper tariffs, it is likely that Mexican exports to China may decline significantly.

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That suggests less wage pressure going forward, which would be favorable for inflation. Finally, she said that government investment in infrastructure and defense should boost growth but that trade tensions will likely “remain a drag on growth” in the coming year. The global economy is facing substantial headwinds, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the weak outlook limits their ability to boost job creation and reduce extreme poverty.

The global mega trends overview below highlights their significant impact on the world’s economy, society, and technological landscape. It is also a roadmap to anticipate their long-term implications on your professional landscape. It allows innovators and business leaders to navigate industry shifts and ensure future success. As a result, bond yields declined from their peak, while the value of the US dollar rebounded slightly.

Hence, the decision to cut the benchmark interest rate in the last several months. Low unemployment and high asset prices have supported ongoing consumer spending resilience this year despite still elevated inflation. While inflation-adjusted spending growth has been in line with the long-term trend of roughly 2.5%, there have been notable variances by category and some signs of strain for younger and lower-income consumers. A jump in student loan delinquencies and elevated—yet stable—credit card and auto loan delinquency trends suggest spending growth could slow for some demographics. To navigate the upcoming fast-changing economic environment, businesses must sharpen their market foresight and adopt proactive strategies to manage risks and capitalise on evolving opportunities. The shifts in market fundamentals—from changing rates, shifting work and retail patterns, to ESG considerations—are disrupting the way professionals evaluate, invest in and manage real estate.

Despite hiring headwinds, the Midwest has seen marked spending gains driven by stronger wage growth and affordability advantages. Jobs growth slowed in November, suggesting the economy remains in “low-hire/low-fire” mode. The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader.

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Europe, the most aged region, will lead this demographic shift, with one in five residents aged 65 or older in 2025. Women’s job growth has been rising faster than overall employment over the last two years, helping drive wage and spending growth. Inspired by social media trends or pressured by rising prices elsewhere consumers, especially Gen Z, cut back on alcohol. The labor market is heating up in parts of the Northeast, but a shrinking pool of workers could stall economic growth.

As most indicators suggest limited risk of a sharp downturn, labor market slack should increase only slightly. We expect payrolls to average 25k in 1Q, before sequentially recovering over the course of the year, averaging 50k in 2Q, 75k in 3Q and 100k in 4Q. The 10-Year Inflation-Indexed Treasury Yield represents the real interest rate investors expect to receive on government securities after accounting for inflation. This critical economic indicator provides insights into market expectations about future economic conditions and investor sentiment. It helps policymakers and economists understand long-term economic expectations and potential investment strategies.

The very high tariff on Chinese imports is already leading to a substantial diversion of trade away from China. The low rates for Mexico and Canada reflect the exemption for goods covered by the free trade agreement between the United States, Mexico, and Canada, which will be renegotiated in 2026. The rising Chinese trade surplus—which has generated criticism by many of China’s trading partners—largely reflects increasing Chinese investment overseas. Essentially, China is a high-saving country, saving more than it invests and sending the surplus overseas. That is, when China exports more than it imports, it accumulates foreign currency that can only be invested overseas.

In a downturn, consumer confidence wanes, retailers struggle, and businesses are forced to deal with uncertainty. And in times of growth, critical infrastructure and innovation can be built out. Together, these visuals offer a snapshot Callyourdate of how global economic conditions evolved over the year and where some pressures are becoming more pronounced. Our diverse, global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change.