Special Edition: Q1 2025 Credit Conditions Macro Reports – Buckle Up!

Welcome a special mini edition of Essential Economics! This week we feature our global and regional macro updates, plus a few related media appearances.

·???????? The degree of US policy implementation on tariffs, taxes and immigration dominates the global macro landscape; we have taken a wait and see approach for now.

·???????? Markets have already priced in higher US inflation pressures, higher US interest rates across the entire government yield curve and a stronger US dollar.

·???????? Our soft-landing view is still the baseline, and our forecasts have not moved much since the previous round, with data revisions accounting for most of the changes. Risks have moved to the downside.

Finally, we tee up next week’s release of our global and regional credit reports, as well as our wrap-up webinar on December 5.

Global Macro Reports: Buckle Up!

In our global macro report, I argue that even before taking office, a second Trump administration is already moving the macro-financial needle and raising downside risks for the global economy.

Our preliminary policy read on the new U.S. administration is that positive growth effects will be minimal, inflation pressures will rise, and the Fed is likely to stop cutting rates earlier. This will lead to tighter financial conditions, a stronger dollar, and a more complicated macroeconomic picture elsewhere.

Owing to a "wait and see" approach, our GDP growth forecasts have not moved much since the previous publication, other than incorporating changes related to base effects. Risks include the full implementation of the proposed U.S. agenda on taxes, trade, and immigration; the end of resilient ?consumer spending and labor demand; and bond market stress. AI is an upside.

The degree of ultimate US policy implementation is a key unknown.

To read the global macro report, click here.

We also released a suite of regional macro reports:

United States:? Steady Growth, Significant Policy Uncertainty (Satyam Panday)

·???????? We forecast the U.S. economy to expand 2.0% in the next two years--incorporating partial implementation of Trump's proposed policies--following 2.7% growth this year.

Canada:?Immigration Policies Hamper Growth Expectations (Satyam Panday)

·???????? We expect GDP growth of 1.2% in 2024 (unchanged from previous forecast) before accelerating to 1.7% in 2025 (was 2.0%).

EMEA:?Next Year Will Be A Game Changer (Sylvain Broyer, Aude Guez, Sarah Limbach)

·???????? We project eurozone GDP growth of 0.8% in 2024 and 1.2% in 2025, with Germany lagging eurozone peers, and Spain continuing to outperform.

United Kingdom:?Monetary Policy And Trade To Offset Fiscal Impetus (Marion Amiot)

·???????? After a slower second half this year, the U.K. economy looks set to gather steam on looser fiscal policy, with GDP rising by 1.5% in 2025 versus our September forecast of 1.2%.

Asia Pacific: U.S. Trade Shift Blurs The Horizon (Louis Kuijs, Vishrut Rana)

·???????? While China's stimulus measures should support growth, we expect its economy to be hit by U.S. trade tariffs on its exports. In all, we now project 4.1% GDP growth in 2025 and 3.8% in 2026.

Emerging Markets:?Trade Uncertainty Threatens Growth (Elijah Oliveros, Harumi Hasegawa, Valerijs Rezvijs, Vishrut Rana)

·???????? A likely increase in trade protectionist policies among major economies will hurt GDP growth in most emerging markets (EMs) in the next couple of years, but the magnitude of the impact will depend on those policies' details, which will become clearer in the coming months.

Economists in the News

Elijah, Louis, and I hit the airways this week to share our updated macro views. Elijah appeared on CNBC to discuss our latest views on emerging markets, Louis discussed our APAC outlook and tariffs at Bloomberg in Hong Kong, and I stopped by the Yahoo Finance studios in New York to discuss our global macro outlook, focusing mainly on the risks around US policy implementation.

To view my conversation with Yahoo! Finance, click here.

To hear from Elijah on CNBC Africa, click here.

To watch Louis on Bloomberg, click here (segment starts at 1:21:00 mark).

Next Week: Credit Reports, Credit Conditions Committee Webinar

We wrap up our flagship Credit Conditions Committee round next week with the release of our regional and global credit reports and our webinar on December 5. The webinar is your chance to hear from our economists and senior credit analysts about our baseline view as well as credit risks facing markets in 2025.

Register for the complimentary Global Credit Outlook 2025 webinars: (Americas/EMEA Session) & ?(APAC Session).

As always, you can find the latest research from the S&P Global Ratings Economics team here.

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