Goldman Sachs announced new updates to its economic forecasts, highlighting changes in central bank policies and global economic growth trends.
Goldman Sachs has reevaluated the Federal Reserve’s approach to interest rates. While a rate cut was previously anticipated in January, this scenario has been revised. The final interest rate is now expected to range between 3.5% and 3.75%, slightly higher than the previous estimate of 3.25%-3.5%. The first 25 basis-point cut is expected in March 2025, followed by additional cuts in mid-year.
The forecasts indicate that the U.S. economy will continue to outperform other developed markets. This strong performance is supported by significant growth in real incomes and noticeable productivity gains. Goldman Sachs predicts U.S. real GDP growth at 2.6% annually in 2025, alongside a decline in the unemployment rate to 4.0% by the end of the year.
Regarding inflation, a gradual decline is expected, reaching 2.4% by December 2025. This decrease is driven by lower housing costs and wage pressures, despite some upward effects from tariff changes.
The European Central Bank is expected to continue cutting interest rates throughout 2025, potentially reaching a policy rate of 1.75%.
In China, the economic outlook remains cautious. Growth is projected to slow to 4.5% in 2025 due to weak domestic demand, challenges in the property sector, and higher tariffs imposed by the United States.
Geopolitical developments play a pivotal role in shaping the global economic landscape. U.S. tariff policies under the new administration could leave a significant mark on the economic performance of Europe and China.
