Bank outlooks point to better business in 2025, tariffs notwithstanding

First the good news – the consensus among banks and analysts in multiple key boat sector markets worldwide is that 2025 should bring an improved business environment as inflation and interest rates return to target levels, driving consumer spending and hiking consumer confidence.

Now the bad news – a range of new tariffs threatened by US president-elect Donald Trump could significantly impact that positive outlook.

As we look ahead to a new calendar year, IBI reviews the most recent economic forecasts among banks and analysts worldwide for a glimpse of what lays ahead. Overall the forecast looks bright and appealing with the sole exception of one dark cloud on the not so distant horizon.

Australia

2025 GDP growth is anticipated to be stronger in 2025 than originally expected, says the Reserve bank of Australia, with inflation expected to reach the target range of 2% to 3% by the third quarter. Growth among major trading partners is expected to help drive an increase in exports, while recovery of GDP growth is anticipated to provide support for the labour market.

Brazil

Brazil’s GDP grew by an annualized 5.9% through the first three quarters of 2024 according to the Banco Central do Brasil, driven by sharp increases in consumer spending. This has spurred a third-quarter increase in inflation, leading the bank to raise interests rates in order to cool the economy. Retail sales were reported to have increased by 3.2% over the previous year, with business confidence up 4.2% year-over-year.

Canada

Canada has struggled in recent years, with per-capita gross domestic product having declined for six straight quarters heading into the new year. With inflation now trending below 3% and multiple interest rate cuts having slashed borrowing rates, that negative trend should end in 2025 when a federal election is expected to bring a change of government and new fiscal priorities. While a low Canadian dollar presently inflates the cost of imported goods, Canadian exporters find themselves able to compete on quality and price simultaneously. That advantage, however, could be eroded should a threatened tariff war with the US develop.

China

2025 is the Year of the Snake in Chinese astrology, a symbol of transformation and adaptability. That promises to hold true with National People’s Congress (NPC) signalling room for fiscal expansion. Potential US tariffs could see China’s GDP growth in 2025 fall to 4.5% from the 4.9% seen in 2024, with Chinese policymakers expected to introduce stimulus measures to offset the impact of tariffs should they materialise. Exports to the US are said to represent just 15% of China’s overseas trade overall, so the impact on GDP from tariff-induced reductions remains to be seen.

France

Economic activity in France is expected to decline slightly in 2025, with a forecast GDP increase in the range of 1.0% according to Credit Agricole Group. Household spending is expected to increase as inflation and interest rates return to target ranges, while business investment is expected to rebound with a year-over-year increase in the range of 1.1%. The public deficit is expected to fall to 5.5% of GDP in 2025, after reaching 6.1% of GDP in 2024.

Germany

Bloomberg anticipates 2025 to be a flat year for the German economy, following a slight contraction in 2024. 2025 GDP growth is forecast in the range of 0.7%, driven primarily by wage increases. Reductions in inflation and lending rates are anticipate to fuel recovery in household spending with mild improvements expected in the labour market.

Italy

Italy’s economy is expected to continue exhibiting moderate but sustained growth in 2025, according to the Instituto Nazionale di Statistica. GDP growth is expected in the range of 0.8% driven in part by increased export activity and increased household spending, bolstered further by an improving labour market. Continued progress in lowering inflation and associated interest rates is expected to drive both spending and investment.

Japan

An improving domestic economy is projected to deliver GDP growth in the range of 1.2% in Japan during the coming year, according to Vanguard Research, with household spending expected to surpass exports in driving growth. Steady wage growth, strong corporate profits and a strong labour market with a 2.4% unemployment rate are anticipated to support a recovery in domestic consumption and keep core inflation at around 2%.

Mexico

Mexico is forecast to experience solid economic growth in the range of 1.25% to 1.75% in 2025 driven by lower inflation figures, lower lending rates, a solid labour market and a growing manufacturing sector driven by nearshoring strategies among US and Canadian manufacturers. Over the past three years, Mexico’s share of foreign direct investment in emerging markets has more than doubled to near 11%, and its share of US imports has risen from about 13% to about 16% according to Vanguard Research. Potential changes to US trade policy represent a significant risk in 2025, in spite of an existing free-trade agreement between Mexico, Canada and the US.

Netherlands

Continued decreases in inflation and interest rates are expected to boost household spending in the Netherlands in 2025, leading to GDP growth in the range of 1.3% according to De Nederlandsche Bank. Wage increases – projected in the range of 3.7% in 2025 – will further fuel consumer spending with an increase in the public deficit expected in order to more aggressively pay down debt.

New Zealand

In its December 2024 economic outlook the New Zealand parliament says that contractions to GDP witnessed in the autumn of 2024 can be expected to shift to slow growth in early 2025, driven by lower borrowing costs and increased household spending. Despite signs of a weakening labour market, inflation continues to decrease toward the 2% target.

Norway

An improved outlook for 2025 anticipates non-oil GDP to increase by 2.3% in Norway, well above the long-term trend according to Norges Bank. Labour demand remains high, with an unemployment figure of just 2.1%. Depreciation of the Norwegian Krone has strengthened competitiveness for exporters, with a negative impact on the cost of imported goods and slowing inflation reduction efforts.

Poland

After rebounding in 2024, Poland’s economy is set to expand at a faster rate in 2025. GDP growth is anticipated in the range of 3.6% according to S&P Global, driven by higher consumer spending as interest rates and inflation return to target levels. With unemployment reported as just 2.8%, some softening in labour market growth is anticipated.

Spain

On the heels of solid economic growth in 2024, Spain is forecast to see GDP increases in the range of 2.3% in 2025 according to the European Commission. Favourable declines in inflation and interest rates are expected to continue strengthening consumer spending and investment, and improving employment figures.

Sweden

Sweden’s economic outlook for 2025 should see GDP growth in the range of 2.2% according to SEB Group. Core inflation and interest rate corrections have positioned Swedish households for spending increases in 2025, with consumer confidence “well above” historical averages. With the Riksbank expected to maintain its policy rate to 2.0% and strong government finances, the SEK is expected to begin appreciating in value in the coming year.

UK

The 2025 economic outlook from the British Chamber of Commerce forecasts a gradual but definite improvement from the current year, with GDP growth anticipated in the range of 1.0%, driven by higher household spending as the impact of lower inflation and interest rates kick in. The outlook for overseas trade growth is expected to remain conservative in the face of ongoing trade barriers with the EU, with both imports and exports expected to begin showing signs of recovery as household spending ramps up and employment numbers continue to show improvement.

US

The US government anticipates 2025 GDP growth in the range of 1.7% on the strength of inflation controls, interest rate cuts and a healthy labour market, according to S&P Global. However, a broad range of new tariffs and trade policy changes championed by president-elect Donald Trump, who assumes office in January, could alter that projection by raising prices on a variety of goods for US consumers. Exports could also be expected to decrease as countries impacted by tariffs implement their own retaliatory measures, as was witnessed during Trump’s first term in office.