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Investing.com -- Deutsche Bank raised its global GDP growth forecast for 2025 to 2.9%, citing trade de-escalation and stimulus policies across major economies, though it warned that geopolitical risks and elevated tariffs remain key challenges.
In the U.S., Deutsche now expects 1.6% growth in 2025, up from previous forecasts, supported by improved financial conditions and potential policy support including tax cuts and extensions of the 2017 tax law.
The bank sees unemployment averaging 4.3% and inflation pressures persisting, with core PCE forecast to end the year at around 3.5%.
Despite a high effective tariff rate of 17%, the highest in decades, Deutsche expects this to decline toward 15% and views the overall economic impact as manageable.
A fiscal package expected in July could further support demand, combining household tax cuts with long-term spending reductions.
For China, growth is now seen at 4.7% for 2025, slightly above earlier estimates.
The bank said policy easing and fiscal stimulus would continue in a more measured form, including a reserve ratio cut by year-end. However, the outlook is tempered by the assumption of persistent U.S. tariffs on Chinese goods through at least 2025.
The euro area growth forecast was revised up to 0.8% for 2025 and 1% in 2026, driven by higher defense spending and stronger credit growth amid rate cuts from the European Central Bank.
Germany’s economy is forecast to grow 0.3% in 2025, with gains accelerating to 1.5% in 2026 as fiscal policy turns more expansionary.
India’s growth forecast remains unchanged at 6.5% for both 2025 and 2026, supported by food price moderation and an expected U.S.-India trade deal.
The global recovery remains fragile, Deutsche said, with risks tied to renewed trade tensions, elevated deficits, and geopolitical volatility.