Capital Economics still sees global growth below 3% this year
Investing.com -- Global growth will likely remain subdued in 2025 despite some recent bright spots, according to Capital Economics.
In a note to clients Thursday, the research firm reaffirmed its forecast for global GDP growth 'of a bit below 3% this year,' citing mixed data and persistent headwinds across key regions.
While world trade has shown signs of resilience, boosted in part by companies 'attempting to front-run tariffs,' broader economic indicators have been less encouraging.
'Business surveys have softened, and falling consumer confidence bodes ill for domestic demand in advanced economies,' analysts at Capital Economics wrote in their May Global Economics Chart Pack note.
The firm adds that China, which has been a key driver of global growth in past cycles, also appears to be struggling.
'Services activity has slowed in China too, and by more than official data suggests,' the analysts warned.
The recent U.S. court ruling against a suite of tariffs imposed under the International Emergency Economic Powers Act is said to only offer limited relief, according to the firm.
'The legal ruling against tariffs in the US may grant only temporary reprieve, as the administration eventually reimposes tariffs one way or another,' they added.
On a more positive note, the firm acknowledges that labor markets around the world remain relatively robust. 'Labour markets remain healthy, with gradual cooldowns offering hope of wage growth easing in the months ahead,' the firm stated.
Still, high services inflation is seen as a constraint on policy easing. 'Headline inflation has fallen this year, [but] services inflation remains high, limiting the scale of interest rate cuts in the year ahead, especially in many parts of emerging Europe and Latin America,' Capital Economics said.
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