Growth

Uncertainty around the global economic outlook has increased following the election of President Trump
Should President Trump swiftly follow through on his campaign proposals of sharp tariff hikes (10% on all trading partners & 60% on China) and the deportation of 11 million undocumented immigrants, we would expect the US & global economies to slide into recession
However, our baseline expects Trump will adopt more targeted tariffs & more modest immigration cuts, which combined with Trump’s pro-growth policies of deregulation & corporate/income tax cuts will keep the US economy on a soft-landing path
Global growth is forecast to average around a 3-3¼% pace in 2025 and 2026, close to that seen over the past two years, but ½ ppt below that seen in the decade prior to COVID
Despite a recent ramp-up in stimulus measures, growth in China is expected remain under pressure, with a further slowdown expected over coming years

Inflation

Underlying inflationary pressures are expected to continue to trend lower over the coming two years, but will be sensitive to the tariff policies actually implemented by President Trump
QIC expects core inflation in most major economies to fall close to central bank targets by mid-to-late 2026

Major central banks are expected to continue to lower rates in 2025 & 2026, but adopt a slower and more cautious approach to forthcoming cuts
QIC expects a further 100bps of rate cuts by the US Federal Reserve (50bps 2025, 50bps 2026), 75bps by the ECB (all 2025) & 150ps by the Bank of England (75bps 2025, 50bps 2026, 25bps 2027) over the coming 3 years
The Bank of Japan is expected to continue to slowly lift rates over the coming year