World Economic Prospects
Each month Oxford Economics’ team of 300 economists updates our baseline forecast for 200 countries using our Global Economic Model, the only fully integrated economic forecasting framework of its kind. Below is a summary of our analysis on the latest economic developments, and headline forecasts. To access the full report (and much more), request a free trial today.
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Outlook remains resilient despite mounting risks
- As Donald Trump’s inauguration as US president approaches, there has been little additional clarity regarding the exact nature of the policies he will pursue in office. We still expect world GDP growth will pick up to 2.8% this year and 2.9% in 2026, following an estimated 2.7% expansion in 2024. But risks to our outlook remain high, reflecting uncertainty about both the scale and timing of changes to US fiscal, tariff, and migration plans.
- Recent news continues to suggest that the US economy is performing strongly, and we expect this resilience to continue thanks to solid fundamentals for consumer spending and investment. We remain sceptical that ongoing actions by Chinese policymakers will be enough to prevent a further modest slowdown in growth this year. Activity in Europe may gain some momentum after a poor 2024, but the broad picture is still one of relatively lacklustre growth.
- Our baseline forecast continues to assume that the US imposes tariffs on a select group of economies targeted at specific sectors, which are anticipated to come into operation around the end of this year. The moderate adverse growth effects of these measures will initially be more than offset by looser US fiscal policy.
- Risks are still skewed towards more extensive or a faster implementation of tariffs. Even so, Trump is unlikely to be willing or able to carry out his threat to raise tariffs on China, Mexico, and Canada on the first day of his presidency. Indeed, we continue to see the risk of blanket tariffs on all imports to the US as unlikely. Extra targeted tariffs compared to our baseline are plausible, but the risk of tariff shifts that are a gamechanger for US and global growth prospects remains low.
- The other key recent development has been the renewed surge in bond yields. At the time of writing, US, UK, and German 10-year government bond yields were at least 50bps higher than at the start of December. Despite the sharp moves in yields we are sceptical that inflationary pressures are building, we think it mainly reflects a pick-up in term premia in response to greater uncertainty. Further increases in yields would be needed for fiscal policies to be recalibrated.

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