Forecast of the International Economy for 2025 Based on the "2025 International Economic Outlook" Report by Wells Fargo
The economic outlook for 2025 from Wells Fargo analysts reflects significant changes linked to the new political reality following Donald Trump's reelection as President of the United States. His economic policies, which include the implementation of new tariffs and the promotion of domestic manufacturing, are likely to have global repercussions. Let's examine the key points of the report to better understand what to expect from the world economy in the upcoming years.
Key Trends
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U.S. Tariff Policy: Donald Trump is planning to impose tariffs on all imported goods (5%) and a 30% tariff on imports from China. These measures could hinder economic growth in both the U.S. and other nations. China, Mexico, and other countries closely tied to U.S. trade are particularly at risk of these changes.
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Federal Reserve Monetary Policy: The Federal Reserve is expected to continue reducing the federal funds rate, but with increased caution. The projected range for the rate by the end of 2025 is 3.5%–3.75%, responding to inflationary pressures triggered by tariffs.
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Global Growth and Inflation: A slowdown in global growth is anticipated, projecting a rate of 2.5% (down from 2.9% in 2024). Inflation will remain elevated in developing economies, although a reduction is expected in developed countries.
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State of Global Trade: U.S. tariffs and protectionist measures from other countries will lead to diversification of supply chains. Countries like India, with lower dependency on exports to the U.S., may benefit from the global trade realignment.
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Stability of the U.S. Dollar: The strength of the U.S. dollar is projected to persist, driven by a robust U.S. economy, the easing of policies from other central banks, and heightened uncertainty surrounding China. Developing countries, particularly the Mexican peso and Brazilian real, are expected to face significant pressure.
Outlook for Major Economies
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United States:
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GDP Growth: 2.0% in 2025 (down from 2.7% in 2024).
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Inflation: 2.6% in 2025.
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Policy: Ongoing tax cuts and encouragement of domestic investments.
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Eurozone:
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GDP Growth: 0.9%.
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Continued easing of rates by the European Central Bank is anticipated to support the economy, although it will not mitigate the impacts of American tariffs.
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China:
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GDP Growth: 4.0% (down from 4.6% in 2024).
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Key Challenges: New U.S. tariffs, weak domestic demand, and ineffectiveness of economic stimulants.
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Mexico:
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GDP Growth: 1.3%.
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High dependence on U.S. exports and limited monetary and fiscal policy space could lead the country into a recession.
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India:
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GDP Growth: 5.7%.
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The country remains relatively insulated due to strong domestic demand and supply chain diversification.
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Currency Markets
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U.S. Dollar: The dollar is projected to continue strengthening, with the euro expected to decline to $0.97 and the Mexican peso to 23 pesos per dollar by 2026.
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Currencies of Developing Countries: The Mexican peso, Brazilian real, and Chinese yuan are anticipated to encounter significant pressure due to tariffs and slowing growth.
A new political era in the U.S. will have a pronounced impact on the global economy. Tariff policies, the easing of monetary policies in developed nations, and slowing growth in developing economies will present new challenges and opportunities. Investors and traders should closely monitor shifts in global economic conditions to accurately assess their strategies moving forward.
This forecast is derived from the "2025 International Economic Outlook" report created by Wells Fargo analysts. For additional details, please visit the official website of the analytical firm.
