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China - Focus in US-China talks shifts from tariffs to chokepoints
Chinese economy shows resilience after US-China truce, but supply side still stronger than demand side. China-US relations: Damage control in place, focus shifts from overall tariffs to chokepoints. Support is being delayed given resilience, but we still expect more to come to support demand.
US - The Fed’s resistance is crumbling
Fed governers’ claims to be able to ease by July are likely politically motivated. Still, with pressure mounting, FOMC members increasingly signal openness to a September cut. The risk of easing too soon remains, with little sign of inflation, while economic slowdown visible.
The Netherlands - Political turmoil amid economic resilience
Q1 GDP revisions suggest a more positive start to 2025, lifting our annual forecast from 1.2% to 1.6%. Tariffs will weigh on activity in the near term, directly and indirectly via main trading partners. The Dutch government fell, adding domestic policy uncertainty amid elevated international uncertainty. With elections on 29 October, 2026 will be well underway before a new government is installed.
Eurozone - The storm before the calm
The economy could well contract in Q2, but fiscal policy is likely to start boosting growth from Q4. More frontloaded government spending has led us to upgrade our German growth forecasts. The ECB signalled a July pause; we expect two more cuts, with the risk tilted to an earlier end to cuts.
Global economic forecasts as of 2 July 2025
Group Economics writes regularly about developments in the macro economy. Here are our latest forecasts on interest rate and currency developments, energy prices and the economic trend in developed and emerging markets.
Global Monthly - Six themes to watch over the summer
Despite the rollercoaster ride in between, the landing zone for tariffs is looking remarkably close to our expectations last November. Trade deals are likely to be announced over the coming weeks, and even if they aren’t, we will probably see deadlines pushed back. Growth is still expected to slow near-term, but downside risks have been reduced, while a re-escalation is likely to prove short-lived. Further out, the US economy is expected to weaken, while eurozone growth is expected to pickup, driven by higher German fiscal spending. We preview these and other themes to watch over the summer. Spotlight: In this Sustainability special, we lay out the macro-economic impact of Net Zero and Delayed Transition scenarios.
Key views Global Monthly June/July 2025
Global growth expected to slow in the near term, as the US tariff shock drives an unwind of the frontloading of exports that occurred in Q1. While the tariff hit to growth remains significant, and the global economy (especially the US) will continue to be weighed by high policy uncertainty, downside risks have eased. Interest rate cuts and other forms of policy support are a cushioning factor in the eurozone and China, while in the eurozone specifically, defence spending, and in Germany new infrastructure spending will support growth in late 2025 and into 2026. Still, the nascent recoveries in domestic demand in the eurozone and China face downside risks from weaker confidence, while in the US, demand will be hit by the tariff impact on real incomes. Inflation in the US is expected to reaccelerate, but to fall below target in the eurozone. This is driving a divergence in Fed & ECB policy, with Fed expected to stay on hold until 2026, and the ECB to cut rates somewhat further.
Housing market monitor - Income growth and limited supply drive up house prices
We expect house price growth of 8% by 2025 (was 7%). Price growth is driven primarily by income growth and supply shortage. Housing transactions are expected to increase by 12.5% in 2025 (was 5%). Sales of investment properties boost housing transactions.
Japan - The Land of the Rising Yields
We expect drags from US tariffs to keep a lid on Japanese growth. Trade talks with the US are taking quite some time. The Bank of Japan (BoJ) recently lowered its inflation forecasts, but upside risks remain. We expect the BoJ to stay on a cautious, gradual hiking path. In its June meeting, the BoJ announced to slow its pace of tapering, as expected. High public debt and rising rates pose challenges, but there are risk-mitigating factors. Meanwhile, the Japanese government bond curve has steepened due to a higher term premium. We do not have indications for structural US debt outflows by Japanese investors, yet. We expect the yen to appreciate versus the US dollar in 2025-2026.
Dutch manufacturing industry surprises with increase in new orders
The Nevi Dutch Manufacturing PMI rose from 49.0 to 51.2 in June. For the first time in a year, the score is above 50, indicating an expansion of business activity. Despite trade tensions with the United States, the level of new orders was on the rise.