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 * Global Outlook: looking ahead to 2025 


GLOBAL OUTLOOK: LOOKING AHEAD TO 2025 

Tue, 24th Sep 2024

Article tags EconomyForecastingGeopoliticsRiskUS electionGlobalUnited
StatesCountry Analysis



--------------------------------------------------------------------------------

In EIU’s October 2024 Global Outlook video, head of global forecasting and
economics, Tom Rafferty, and principal global economist, Joshua Bailey, discuss
what to expect for the US economy, US-China relations and geopolitical risks in
2025.



EIU expects US economic growth to slow, but to remain fairly resilient. Growth
remained firm in the first half of 2024 as robust job creation and solid
household finances continued to drive consumer spending. However, cracks are
starting to emerge and we forecast a slowdown going into 2025, predominantly
driven by a cooling labour market and high interest rates taking its toll.

> “The Federal Reserve (Fed, the central bank) is embarking upon a cycle of
> interest rate cuts to support households and prop up job creation. As a
> result, growth will ease towards the end of this year with interest rates
> starting to bite on output and flow through to domestic demand which will
> remain strong enough to prevent a technical recession. EIU forecasts real GDP
> growth of 2.4% in 2024, with a deceleration to 1.4% in 2025. This slowdown in
> the US will have a ripple effect on the global economy and we now expect real
> global GDP to expand by 2.6% year-on-year on average over the next 5 years —
> well below the 3% of the 2010s which was hardly a stellar decade for the
> global economy.”
> 
> Joshua Bailey, principal global economist, EIU

In terms of US relations with China, competition between the two countries will
remain on multiple fronts but there is an effort on both sides to moderate
tensions and risks of escalation. The visit of US National Security Advisor Jake
Sullivan to Beijing, where he met with China’s President Xi Jinping, has
resulted in the formalisation of a strategic channel of communication between
the two nations. 

However, there is a bipartisan consensus in the US Congress that further
confrontation with China is justified and EIU expects that this will be
reflected in the legislative agenda that comes through Congress, irrespective of
who controls both houses next year. There is a risk that the relationship will
deteriorate significantly in 2025 should there be a change in party in the White
House, sparking further geopolitical concerns around the globe. 

While there are some clear geopolitical risks to continue to observe going into
2025, there are others that should be considered. Firstly, should the conflict
in the Middle East intensify, there is a possibility of a breakdown in
diplomatic relations surrounding Iran’s nuclear deal due to the redlines imposed
by Israel and the US.

Secondly, South Korea’s president, Yoon Suk Yeol, has demonstrated a reduced
inclination towards diplomatic engagement with North Korea than his predecessor,
Moon Jae-in. If Donald Trump were to win the US election, it’s expected that
North Korea may resume its sabre-rattling with the South, potentially leading to
heightened tensions. 

The analysis and forecasts featured in this video are accessible through EIU’s
Country Analysis service. This integrated solution provides critical, global
insights into the political and economic landscapes of nearly 200 countries and
monitors the risks affecting business operations and strategies.

Tue, 24th Sep 2024 Article tags EconomyForecastingGeopoliticsRiskUS
electionGlobalUnited StatesCountry Analysis

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