The latest data suggest that resilient consumer spending supported GDP growth in the US towards the end of last year, while activity in other advanced economies remained weak. Industry continues to struggle in DMs, while in China it is benefiting from policy support and strong export orders ahead of likely tariffs. With consumer confidence weak, real income growth set to slow and borrowing costs still high, global growth should remain below trend in 2025. Headline inflation has ticked up recently in several economies. But the combination of below-trend GDP growth and looser labour markets should weigh on underlying price pressures. Accordingly, most central banks will be able to continue cutting interest rates. However, Trump’s policies mean the Fed will proceed cautiously, while sticky inflation in Latin America and Emerging Europe means rates will stay restrictive.
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