Global | Calm amidst uncertainty

What does the second coming of Donald Trump mean for the perspectives of the global economy? The truth is it’s very hard to say.

Key points

• Key points:
• For now, the key indicators seem relatively stable as we near the end of the year, with a soft landing for the US economy. Meanwhile, China and Europe are having a harder time, with weak economic activity and numerous structural challenges, although inflation has been retreating in Europe.
• However, we know that this apparent calm hides a potentially turbulent scenario ahead, due to the economic policies announced during the US election campaign, especially Trump’s trade protectionist measures.
• BBVA Research has revised its global growth forecasts for the coming years. Higher tariffs in the United States would make it harder to keep a lid on inflation, which could reach 3% and 2.8% in 2025 and 2026, respectively, while growth would remain at levels close to 2%.
• The tariff impact on European exports (assuming a 10% tariff hike), together with the weakness demonstrated on several fronts, would dampen euro area growth to around 1% in both years.
• China could also be negatively affected, although the authorities have room to maneuver when it comes to fiscal and monetary policy, thus helping to cushion the impact.

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