2025 annual global real GDP growth forecast lowered to 2.2%: S&P GMI

Given growing concern over a possible waning of foreign appetite for US treasuries (debt instruments the US government sells to finance its activities), the jump in yields in early April was a worrying sign, the company noted.

While the acute near-term risk of a negative feedback loop between market turmoil and recession has diminished, the chronic problems of US policy volatility, related uncertainties and adverse economic spillovers are likely to linger, S&P GMI said in a release.

The company has cut its global growth forecasts for 2025 and 2026 in its April’s update, rejecting the issues above. Its annual global real GDP growth forecast for 2025 has been lowered from 2.5 per cent to 2.2 per cent. Back in October 2024, prior to the US elections, its forecast was close to 3 per cent.

Next year’s global real GDP growth forecast has been reduced from 2.7 per cent to 2.4 per cent. In both years, projected global growth would be the weakest since the global financial crisis of 2008-09, excluding the COVID-19 pandemic. Risks are to the downside, the release said.

April’s downward revisions to its growth forecasts are broad-based across economies. Its forecasts for annual US real GDP growth in 2025 and 2026 have been cut by 0.6 and 0.4 percentage point respectively to 1.3 per cent and 1.5 per cent.

In Canada, it continues to forecast GDP contraction in mid-2025.

In China, as trade tensions with the US escalate, sub-4 per cent annual growth rates are now projected this year and next.

Its forecasts for growth in India, while still outperforming, have also been lowered.

Western Europe’s near-stagnation is also forecast to continue in the near term, although fiscal policy should support eurozone growth from 2026, contributing to a modest global pickup.

The signals from S&P Global’s purchasing managers’ index data are not encouraging. Even prior to the chaos surrounding reciprocal tariffs, the global composite output index registered its weakest performance in five quarters during the first quarter this year.

Moreover, the surveys of business expectations have deteriorated across almost all major developed and emerging economies, with tariffs cited as the prime cause for concern.

The price indices for global manufacturing have also been picking up, with the steepest increases in input and output prices occurring in the United States, again linked to tariffs.

ALCHEMPro News Desk (DS)