The latest data suggest that the global economy lost some momentum in Q4. Industrial activity appears to be softening, while global trade – which has held up well despite US tariffs – fell in October. In advanced economies, consumer confidence remains downbeat and unemployment rates have continued to tick up in several cases, supporting our view that consumption will be muted. But an AI-related investment boom will continue to boost GDP growth in the US, causing it to outperform other DMs. Altogether, the data are in line with our view that the global economy will muddle through. The benign inflation outlook in Europe and several EMs means we still expect many of those central banks to cut policy rates further this year. But stickier inflation in the US means the Fed will only cut rates once more.
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