Investing.com — Donald Trump's return to the U.S. presidency is set to impact global markets, with analysts predicting rapid action on tariffs in early 2025. A 60% tariff on Chinese imports and Duties of 10-20% on other trading partners are likely, adding inflationary pressure and slowing investment.
Analysts forecast that U.S. GDP growth will slow to 2.2% in 2025, from 2.8% this year. The Federal Reserve will limit rate cuts after March, leaving the upper limit at 4.25% at the end of the year. Strong economic fundamentals, supported by resilient private sector balance sheets and accommodative financial conditions, should mitigate the impact of tariffs.
On the other hand, Europe faces stagnation. The ECB is expected to prioritize growth over inflation, with five rate cuts anticipated, bringing the deposit rate to 1.75%. The economic gap between the euro zone and the United States is expected to widen.
China's growth is expected to slow to 4.0%, even with the anticipated fiscal stimuli. Trump's tariffs could intensify headwinds, challenging Beijing's efforts to stabilize its economy.
Asia will experience mixed fortunes. Japan, Taiwan, Malaysia and the Philippines are expected to outperform, while India, South Korea and Thailand face underperformance amid disinflationary trends.
The report highlights uncertainties related to Trump's deregulation and trade policies, adding volatility to global supply chains and investment strategies. Analysts recommend long USD positions and selective rate plays, underscoring the fragmented global outlook ahead.
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