Economic outlook 2025 – The world according to Trump

2024 was marked by wide regional disparities. In the US, the vigour of consumer spending came as a surprise. In China, the lull continued, prompting the authorities to promise more stimulus. Europe staged a modest recovery driven by exports, but fresh obstacles are emerging both domestically (politics) and internationally (trade war, security). The outlook depends in large part on Donald Trump. His intentions are clear. The MAGA programme is that of a predator at the top of the food chain. To survive, other countries will have to be cunning or capable of showing strength. The implementation of this programme is rife with uncertainties about the magnitude and sequencing of measures (tariffs, taxes, immigration and deregulation). At first sight, the effects look set to be disruptive for global trade, which is negative for world growth, and inflationary, which may prompt the Fed to halt rate cuts. In the short term, the ECB is the only body capable of reinjecting momentum into the eurozone recovery through the credit cycle. The other cause for hope in Europe is if Germany manages to loosen the constraints on activity (cost of energy and debt brake) once elections are out of the way.