Goldman Sachs Assesses Fed, GDP, and Inflation Forecasts During Global Economic Change By Investing.com

Investing.com – Goldman Sachs has upgraded its economic forecast, indicating uncertain changes in monetary policy expectations and global growth trends in 2025.

Analysts have upgraded their forecasts for the US Federal Reserve’s policy, removing a cut previously expected in January.

The final rate is expected to fall in the range of 3.5-3.75%, compared to earlier estimates of 3.25-3.5%. The business community expects the next 25 cuts in March, followed by further cuts in June and September.

The US economy is expected to continue to outpace its advanced peers, supported by strong income growth and high productivity gains.

Goldman predicts US real GDP growth at 2.6% annually through 2025, as well as a gradual decline in the unemployment rate to 4.0% by the end of the year.

Inflation is expected to decrease to 2.4% in December, driven by lower housing costs and wage pressures, despite upward pressure from rate changes.

Globally, Goldman Sachs expects annual real GDP growth of 2.7%, supported by rising disposable incomes and easing financial conditions. However, issues with the structure of the Eurozone and China may reduce the rate.

In the Euro area, real GDP growth is forecast at a modest 0.8%, hampered by high energy costs, competitive pressures from China, and fiscal consolidation.

The European Central Bank is expected to continue cutting rates until mid-2025, potentially reaching a policy rate of 1.75%.

In China, the outlook remains cautious despite the recent easing of policy. Real GDP growth is expected to slow to 4.5% in 2025 due to weak consumer demand, challenges in the goods sector, and higher US tariffs.

Long-term risks are compounded by unfavorable demographics and a global trend of supply diversification away from China.

Environmental developments, including US tariff policies under the new administration and ongoing tensions in the Middle East and Ukraine, remain important factors to consider.

Analysts note the potential for major impacts on the European and Chinese economies if the tariffs are implemented.

The developments highlight a complex global economic environment where growth opportunities are limited by persistent structural problems and political instability.