Rhythmic Reasoning_Full Report_Final_EN - Flipbook - Page 5
RHYTHMIC REASONING | TEMPO, TIMING AND TUNING
G LO B A L E CO N O M I C O U T LO O K
Jean-François Perrault
Juan Manuel Herrera Betancourt
Senior Vice President & Chief Economist
Senior Economist, Investment Strategy
2025f
2026f
World
3.7%
3.3%
2.9%
2.7%
Canada
2.2%
1.6%
1.2%
1.6%
United States
2.4%
2.8%
1.8%
1.4%
Eurozone
1.4%
0.8%
1.2%
1.0%
United Kingdom
2.0%
1.1%
1.2%
1.1%
Japan
1.2%
0.1%
1.0%
0.7%
China
7.7%
5.0%
4.8%
4.2%
Mexico
2.3%
1.4%
-0.1%
0.6%
Colombia
3.7%
1.6%
2.6%
2.9%
Chile
3.3%
2.6%
2.5%
2.5%
Peru
4.5%
3.3%
3.1%
2.9%
Emerging
2024
Developed
2010-2019
ECONOMIC UNDERPERFORMANCE TO CONTINUE DESPITE
TARIFFS ‘CLARITY’
Global central banks are increasingly being confronted with the
conflicting impact of President Trump’s policies on inflation and
growth. The growth impacts are becoming clear in a broad range
of countries, most notably seen in U.S., Canadian, and Mexican
labour markets, as an example. Greater clarity on the ‘final’ levels
and coverage of U.S. tariffs has reduced the possibility of deep
economic downturns in the U.S. and its main trading partners,
as we had feared in early-April with the ‘Liberation Day’ tariffs
announcement (Fig. 1). Clarity notwithstanding, the U.S.’s large,
and sudden tariff hike should continue to dampen domestic and
global growth prospects in the quarters ahead (Fig. 2).
While the majority of global central banks are facing below
potential or underwhelming rates of economic expansion (Fig. 3),
inflation remains problematic for a number of them, requiring
a careful approach to monetary policy as we close in on five
years of above-target inflation across several countries in the G20.
In the U.S. and Canada, underlying measures of inflation that
remain around 3% represent a challenge for officials that may have
otherwise preferred looser monetary policy amid muted economic
conditions.
Fig. 1: Most see stable or higher growth revisions for 2025
KEY CONCLUSIONS
•
•
•
Global central banks are increasingly being confronted with
the conflicting impact of President Trump’s policies on
inflation and growth. In North America, labour trends have
motivated additional loosening of monetary policy.
While most global central banks are facing below potential
or underwhelming rates of economic expansion, inflation
remains problematic for a number of them, requiring a
careful approach to monetary policy as we close in on five
years of above-target inflation across several countries in the
G20.
Tariffs clarity and its associated reduction in uncertainty is
a positive, but duty rates are still significantly higher than in
2024, due to challenge growth in the Eurozone, Japan, and
China. Meanwhile, Canada and Mexico will have to contend
with next year’s USMCA review.
Growth trends are firm in South America, with encouraging
breadth to the GDP gains seen in Chile, Colombia, and Peru.
However, general elections in these countries between
November and April could generate economic anxiety over
the next few quarters that softens growth momentum.
% 2025 GDP growth
•
6%
4%
2%
0%
-2%
U.S.
CA
Apr 2025 forecast
MX
EZ
U.K.
JP
Jun 2025 forecast
CN
CL
CO
PE
Sep 2025 forecast
Source: Scotiabank Economics, Scotia Wealth Management
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