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World Economic Outlook in Autumn 2025: Global Economy Hampered by an Adverse Trade Environment

2025-09-11T00:00:00+02:00

US trade measures have driven the global outlook downwards compared to spring forecasts: global GDP growth is expected to stand at 3.0% in 2025 and 2.9% in 2026, down from 3.3% in 2024.

Among advanced economies, growth is set to considerably slow in 2025 and 2026 in the United States, as consumption is adversely impacted by tariff hikes and budgetary cuts. Euro area growth should be driven by a pick-up in consumption following a decline in inflation and by sustained investment as a result of falling interest rates. However, growth is expected to be hindered by trade tensions and the appreciation of the euro. Germany’s growth is set to be sluggish in 2025, but should recover in 2026 with the help of fiscal stimulus, while weak growth is expected in Italy in spite of support in the form of the National Recovery and Resilience Plan (RRP). Spain’s growth is projected to remain far more robust, driven by population growth, dynamic investment and tourism. An expansionary fiscal policy is expected to support the United Kingdom’s growth.

Most major emerging economies are expected to experience a slowdown in growth in 2025 and 2026: in particular, China’s growth is set to falter as a result of trade measures and persistent structural imbalances.

Global trade should continue to be hampered by US trade measures, with growth of just 2.1% in 2025 and 2.3% in 2026, significantly below its historical average (2.8% from 2015 to 2019). Recovery in 2025, expected as a result of forecasts of tariff hikes for the first half of the year and demand from advanced economies, should be weaker than projected as it has been hindered by a decline in imports from China and India. In 2026, a pick-up in emerging-economy imports is not expected to offset declining US imports.

The risks surrounding this scenario are mostly skewed to the downside as the Trump administration continues to threaten to impose new tariffs amid persistent geopolitical tensions.

World Economic Outlook in Spring 2025 Growth Amid Global Turbulence

2025-03-20T00:00:00+01:00

The international scenario, set on 21 February, assumes that the United States will double its existing tariffs on imports from the European Union, China, Canada and Mexico from the 2nd quarter of 2025 onwards. Equivalent countermeasures by these trading partners are also assumed to take effect at the same time. The ensuing turbulence is expected to reduce global GDP growth by 0.1 percentage points (pp) in 2025 and by 0.2 pp in 2026. Similarly, world trade is projected to shrink by 0.2 pp in 2025 and by 0.7 pp the following year.

In line with these assumptions, and provided uncertainties around US economic and trade policies resolve quickly, the global economy should still perform fairly robustly, though somewhat weaker than predicted in September 2024. Global GDP is projected to grow at a steady 3.2% in both 2025 and 2026, roughly in line with 2024, and only marginally below the average pace recorded during the 2010s.

Among advanced economies, economic prospects diverge. Growth is expected to remain solid in the United States – if financial stability persists and investment is not excessively dampened by trade policy uncertainties – and in Spain. Germany, however, faces sluggish prospects, weighed down by delays in the emergence of the recently unveiled investment plans’ effects (announced after the forecast cut-off date), while Italy and the United Kingdom are likely to fall in the middle. These differences reflect differing exposure to tariff hikes and varying growth momentum for 2025, established at the end of 2024. By 2026, these disparities are expected to narrow somewhat.

In the major emerging economies, namely China, India, Brazil and Turkey, economic activity is expected to slow down in 2025. China’s performance is expected to be particularly hampered by enduring structural imbalances. For 2026, the trajectory for emerging economies is expected to be closely tied to the course of monetary policy.

Paradoxically, despite tightening trade policies, global trade volumes are set to pick up speed in 2025 and 2026 after two years of subdued momentum. However, this recovery should be partial and notably weaker than anticipated in the previous September forecast (see Chart). Global trade is expected to continue to be driven by emerging economies, and as a result France should experience comparatively modest demand growth.
These forecasts come with substantial risks – primarily emanating from uncertain global trade policy developments: recent tariff announcements by the US administration amplify downside risk significantly with regard to the assumptions adopted.

Nowcasting French GDP Growth During Exceptional Periods

2024-08-22T00:00:00+02:00

Nowcasting, or very short-term forecasting, is a crucial tool for understanding major changes in the economy and detecting turning points in the business cycle. Nowcasting is the first stage in the economic forecasts at the two-year horizon established by the Directorate General of the Treasury to prepare France’s budget acts and stability programmes.

In the period from 2020 to 2023, supply difficulties arising from the COVID-19 health crisis and Russia’s war of aggression in Ukraine played a greater role in restricting economic activity than demand for firms’ output (see Chart). France’s economic trajectory during this exceptional period was thus influenced more by supply factors than by demand factors that typically dominate.

The predictive performance of economic models based explicitly or implicitly on demand variables thus worsened during the crisis period, notably in the case of the nowcasting models that rely on composite business climate indicators to predict GDP growth.

Alternative models incorporating automatic input variable selection can be used to identify, from a vast array of data sources, those items that make the greatest contribution to improving predictive performance. Such models are simple to interpret and econometrically similar to conventional models.

For the recent period, an ex-post estimation shows that variables such as supply constraints in manufacturing, which are typically absent from conventional models, would have made the greatest contribution to improving short-term GDP forecasting for France.

World Economic Outlook in Spring 2024 Moderate and Uneven Growth

2024-03-19T00:00:00+01:00

Global growth is projected at 3.1% in 2024, mirroring the pace set in 2023, with a slight uptick expected in 2025 to 3.2%. This outlook marks a modest improvement over previous forecasts from autumn 2023. Despite easing production constraints and a confirmed inflationary pullback, the global economy remains shackled by the lingering effects of monetary tightening and geopolitical uncertainties. The global economy’s growth trajectory, therefore, slightly lags behind the late 2010s average.

Growth in advanced economies is anticipated to remain subdued, with significant disparities among countries. In 2024, economic activity is expected to be robust in the United States and Spain but sluggish in other major advanced economies like the United Kingdom and Germany. By 2025, growth rates are anticipated to converge, driven by an acceleration in the euro area and a slowdown in the United States, assuming a gradual return of the savings rate to its historical average.

Major emerging economies like India, Turkey and Brazil should see a slowdown in 2024, followed by a rebound in 2025. China’s economy is projected to continue slowing, hampered by its failure to pivot its growth model towards domestic demand.

After a decline in 2023, global trade is expected to recover in 2024 and 2025. However, the global demand for French exports is predicted to be less robust than international trade. This reflects the more sluggish activity in the euro area, which is expected to rebound modestly in 2024, before accelerating in 2025 (see Chart on this page).

Geopolitical uncertainties, the timing and magnitude of key rate cuts, and shifts in consumer behaviour emerge as the primary risks surrounding this scenario.