In Euromonitor International’s Q2 2025 baseline forecasts, global real GDP growth is projected to decelerate to 2.9% in both 2025 and 2026, down from 3.2% predicted in Q1 2025, mainly driven by weaker growth expectations for the US and China. The risk of an intensifying global trade war and financial market volatility also clouds the near-term outlook.
Growth outlook worsens in advanced economies
Developed economies are expected to see moderate but slowing growth in 2025, with new tariffs and policy uncertainties undermining trade and business and consumer confidence.
Real GDP growth in advanced economies is projected to ease to 1.4% in 2025, from 1.8% in 2024
Source: Euromonitor International
In the US, growth is expected to slow to 1.8% in 2025, down from 2.8% in 2024. While President Trump’s tax cuts and pro-business measures could provide some support, supply chain disruptions, higher import costs and policy uncertainty are expected to restrain economic activities, threatening an end to the country’s prolonged period of growth exceptionalism.
The Eurozone continues to be the weakest among advanced economies, with real GDP growth forecast at 0.9% in 2025. Lower energy costs and front-loading exports are helping boost growth in the first quarter, but US tariffs and slowing global demand would affect trade-reliant economies such as Germany.
Outlook for emerging economies dims amid new trade headwinds
Real GDP growth in developing economies is projected at 3.9% in 2025, marking a modest downgrade from earlier estimates. Developing Asia continues to act as the engine of expansion, with India, the Philippines and Vietnam each expected to post above 5.0% growth rates. India and the Philippines are seen as relatively insulated from potential disruptions in global trade, while Vietnam remains heavily reliant on external demand, particularly from the US. China's growth forecast has been trimmed to 4.0% for 2025, reflecting ongoing fragility in the property sector and rising trade tensions with the US. Despite a rise in front-loaded exports in the first months of 2025, China’s Manufacturing Purchasing Managers Index (PMI) fell below the 50-point threshold in April and May, pointing towards declining new orders and slowing manufacturing activities.
Tariffs risk rising inflationary pressures
In Euromonitor’s Q2 2025 baseline forecasts, global consumer price inflation is expected to slow to 4.1% in 2025, before moderating further to 3.4% in 2026 amid slowing economic activities. Higher tariffs and supply chain disruptions, however, are posing upward pressures on prices in some parts of the world.
Inflation in advanced economies is forecast to average 2.5% in 2025, reflecting higher price pressures in the US, where tariffs have driven up costs for firms and consumers. Meanwhile, inflation in the Eurozone is expected to remain more subdued, thanks to lower energy prices, a stronger euro and potentially excess goods supply from China.
Growth outlook worsens in advanced economies
The global baseline outlook remains fragile amid various geopolitical, economic and climate risks. Despite some easing of tariffs in April and May 2025, ambiguity around US trade policies remains. Any escalation of US tariffs and retaliation measures could intensify the global trade war and affect global growth, as reflected in the Trump Total Agenda scenario.
Euromonitor International’s Trump Total Agenda scenario assumes full implementation of US tariffs announced on 2 April that triggers retaliation by tariffed countries. Under this scenario, global real GDP growth would fall short of the baseline by a cumulative 3.1 percentage points over the 2025-2027 period. The US economy would slow significantly as higher inflation, supply bottlenecks and a declining labour force and possible retaliatory tariffs weigh on growth. China would see exports and investment contract, exacerbating structural weaknesses in its economy. Export-reliant economies such as Singapore, Hong Kong and Vietnam would also experience a sharp slowdown in growth before adjusting to the new global trade environment.
Learn more about how to solve business challenges in our 2025 Global Economic Update and Mid-year Outlook. The impacts of different macro-economic scenarios, and the global economic outlook in Q2 2025 can be found in our full report, Global Economic Forecasts: Q2 2025, and our webinar, The Business of Uncertainty: Impact of Trump Policies Across Industries.
