The Trump 2.0 administration’s efforts to restructure global trade, combined with the IMF’s upward revision to the 2024 baseline, led to a 0.5ppt downgrade in 2025 global growth projections to 2.8% (the weakest pace since the 2020 COVID-19 pandemic). This outlook reflects concerns over reinflation risks, geo-politics, supply chain, and broader challenges to global integration and migration. As such, Advanced Economies (AEs) and Emerging Markets and Developing Economies (EMDEs) are projected to see a 0.5ppt decline apiece, to 1.4% and 3.7%, respectively. While the outlook for H2 remains modest, the continued strength in key economic indicators over, interest rate cut stimulant, potential for meaningful trade truce, and a rebound in commodity markets are key catalysts that are supportive of global economy and financial market performance going forward.
Shifting gears to the domestic macroeconomy, we made some bold calls at the start of the year regarding the expected performance of key macroeconomic indicators. Our projections were anchored on the historical trajectory of these variables, the policy antecedents of the current administration (fiscal and monetary), and permutations around global policy shifts, particularly with the clarity that a power change in the U.S. was imminent following Donald Trump’s victory in the November 2024 general elections. Despite limited guidance on factors such as the NBS’s choice of a new base year, sector reclassifications, component reweighting, and the inclusion of new activity sectors, we projected that GDP and the average inflation rate for 2025 would settle at 3.3% and 24.7%, respectively, in our base case scenario – down from 3.4% and 33.0% in 2024. Halfway into 2025, the NBS has yet to publish the Q1:2025 GDP data, which should reflect, among other things, the contributions of eight newly introduced activity sectors unveiled during the GDP rebasing sensitization held in January 2025.
