Persistent high consumer prices and elevated levels of uncertainty continue to affect households, leading to low levels of overall consumer confidence in the US and beyond. Despite the uncertainty, leading indicators were above long-term trends across the main economies during March.

Economies are continuing to reduce interest rates, except Russia and Brazil, which have been raising rates to combat high inflation. On March 19, the Banco Central do Brasil’s Monetary Policy Committee (Copom) followed through on its earlier guidance, raising the Selic rate from 13.25% to 14.25%. The Central Bank of the Russian Federation, meanwhile, maintained its key interest rate at a high level: 21%. The US held rates steady at 4.25 to 4.50%, where they have remained since December. In contrast, the Reserve Bank of India (RBI) lowered key interest rates by 25 basis points on April 9, while the European Central Bank (ECB) made a similar cut on April 17.

Recent policy has weighed on growth in the US. Real GDP decreased at an annual rate of 0.3% in the first quarter of 2025, according to the advance estimate released by the US Bureau of Economic Analysis on April 30 (Exhibit 1). For comparison, the fourth quarter of 2024 saw real GDP increase by 2.4%. This first-quarter drop in real GDP primarily reflects an increase in imports, which are a subtraction in the GDP calculation, together with a fall in government spending.

In Europe, the euro area economy is expected to grow by 0.8% in 2025 and 1.2% in 2026 (a downward revision of two percentage points for 2025), according to the IMF’s April 2025 projections. This subdued growth is partially offset by Germany’s significant fiscal stimulus. However, other downside risks remain given weak export activity and ongoing investment challenges, partly attributable to increased trade policy uncertainties.

China’s GDP recorded a stronger-than-expected growth rate of 5.4% year over year in the first quarter of 2025—market consensus was around 5.2%. Consumption accounted for 51.7% of the GDP growth, trade for 39.5%, and investment for 8.7%.

US consumer confidence tumbled again in March—this time driven by stock market volatility and persistent inflation concerns. March’s US consumer confidence index reading (Conference Board) was down 7.2 points to reach 92.9 in April, its lowest point since 2022. In Brazil, consumer confidence remained below the neutral 100 mark, falling to 84.6 in March (from 85.6 in February). Declines in consumer confidence put the brakes on consumer spending, which continues to slow across the main economies (Exhibit 2).

Overall, inflation expectations have continued within a 2.0 to 2.5% range. In March, median inflation expectations in the US increased by 0.5 percentage points to 3.6% at the one-year horizon.

Most commodity prices appeared stable in April, though significantly higher than before the pandemic. Food prices were broadly unchanged in March and remain some 23% above prepandemic levels. Energy prices moved sideways, with industrial metals also following a similar constant trend over recent weeks. However, the price of gold was trending above $3,000 during April.

Among developed economies, inflation continues to ease, showing a horizontal trend. It’s a similar situation among most surveyed emerging economies. In the US, the consumer price index (CPI) rose 2.4% over the 12 months ending in March, after increasing 2.8% over the 12 months ending in February. Core inflation decreased slightly to 2.8% (annualized). However, March saw median inflation expectations rise by 0.5 percentage points to 3.6% at the one-year horizon. Headline inflation in the eurozone eased to 2.2% in March, driven by a drop in energy inflation (–1.0%) and slowing core inflation (+2.4%) as services inflation cooled to 3.5%. UK CPI inflation fell to 2.6% in March, down from February’s 2.8%; core CPI rose by 3.4% in the 12 months to March 2025 (February 3.5%).

India’s retail inflation slipped to a more-than-five-year low of 3.34% in March as food prices continued to moderate. The RBI lowered the key policy interest rate by 25 basis points to 6.00% on April 9—its second consecutive cut this year. Similarly, Mexico’s annual inflation rate held steady at 3.8 in March. The Bank of Mexico lowered the benchmark interest rate by 50 basis points to 9.00% on March 27—its fifth cut in six months—in an effort to boost investment and counter signs of an economic slowdown. In Brazil, inflation accelerated to 5.48% in March, up from 4.83% in December, well above the Central Bank’s upper target limit of 4.50%.

The global purchasing managers’ indexes (PMIs) indicate that both the manufacturing and services sectors were in expansion territory in March, with services rebounding from a dip in February. However, country PMIs suggest that manufacturers remain cautious while demand slows and both input and output prices accelerate.

Taking a closer look at the developed economies, industrial activity in the US again gave out mixed signals, although they were somewhat positive. The industrial production index fell slightly to 103.9 in March (104.2 in February). The manufacturing PMI rose to 50.7 in April from 50.2 in March. In Europe, the industrial production index increased by 1.1% month over month and grew 0.6% year over year. The composite PMI dropped to 50.1 in April (50.9 in March); the manufacturing PMI rose to 51.2. Meanwhile, the seasonally adjusted S&P Global UK Manufacturing PMI fell to a 17-month low of 44.9 in March, down from 46.9 in February.

India’s manufacturing growth was strong, with the PMI edging up to 58.2 from 58.1 to sit at a level not seen for more than six months. Brazil’s manufacturing industry continued to contract early in the year, with the Monthly Industrial Physical Production Index (PIM) declining from 94.9 in January to 93.7 in February. In Mexico, the PMI dropped to 46.5 in March from 47.6 in February.

March also delivered a mixed picture for services across countries, though most still pointed to a rebound from the low February readings. In the US, the services PMI recorded 51.4 for April versus 54.4 in March. The eurozone services PMI declined to 49.7 in April (March: 51.0). By contrast, the S&P Global UK Services PMI registered 52.5 in March, up from 51.0 in February and the highest reading since August 2024.

Among emerging economies, India’s services PMI indicated solid growth, edging up from 58.5 last month to 58.7 in April. Brazil’s Monthly Services Survey (PMS) volume index declined to 113.5 in February (from 115.7 in January). This was mirrored in the revenues index, which dropped to 101 (from 102.7).

Unemployment rates remained stable across most surveyed economies. Among the developed economies, the US labor market showed modest changes: Unemployment was up slightly to 4.2% in March, while nonfarm payrolls rose by 228,000. In the UK, unemployment was estimated at 4.4%. Among the emerging economies, China saw the overall surveyed urban unemployment rate decrease to 5.2% in March (5.4% in February). In Brazil, the three-month moving average unemployment rate rose slightly to 6.8% in February (from 6.5% in January), while Mexico’s total unemployment was up slightly in February, by 0.04 percentage points to 2.65%.

The current uncertain economic, geopolitical, and trading environment has taken a toll on markets: Equity markets experienced a steep drop in April. In the US, the S&P 500 was down 5.8%, bringing the one-year return to –4.6%. The Dow Jones lost 4.2% over the month of April and fell to a 1.3% annual growth, with some commentators highlighting its worst April performance since 1932 during the Great Depression. The main volatility indexes climbed after April’s equity market crash. However, government bond yields appear to have slowed slightly for most economies over recent months. During March, the CBOE Volatility Index averaged 21.8, compared with 19.6 in February.

World trade volume growth was zero in February compared with the previous month, after a 0.7% increase in January. Total port trade remains below the year-ago level. March saw the Container Throughput Index drop to 135.3 points from 137.6 in February, with throughput in Europe and China showing the first effects of the announced US customs policy. Global supply chain pressure was near the historical average in March; however, there are high expectations of a rise in April.

US trade data did not change significantly: February exports climbed slightly to $278.5 billion, $8.0 billion more than January exports; February imports came in at $401.1 billion, $0.1 billion less than January’s imports. The monthly deficit decreased to $122.7 billion in February, a reduction of –6.1%. The eurozone trade surplus increased in February, up from €0.8 billion in January to €24.0 billion.

In the first quarter of the year, China’s cross-border trade slowed, registering a year-over-year growth rate of 0.2%, compared with 4.9% in the fourth quarter of 2024. Specifically, exports growth decelerated to 5.8%, down from 10.0% in the fourth quarter of 2024. However, exports staged a strong recovery in March, surging to a 12.4% increase from the −3.0% decline in February. Meanwhile, imports growth weakened to −7.0%, compared with −1.7% in the fourth quarter of 2024. Brazil’s March trade balance posted a surplus of $8.1 billion, a sharp turnaround from the $445 million deficit in February. Mexico posted a trade surplus of $2.2 billion in February, as exports rose to $49.2 billion from $44.4 billion in January, while imports declined to $47.0 billion from $49.0 billion.

“In a moment of tariffs, can the world find balance and trust to thrive?” highlights five signposts for business leaders to monitor:

Trade frictions decrease, with remaining trade barriers focused on resiliency or national security. Inflation appears bounded, supported by central bank action. Consumer sentiment rebounds with continued spending in the US and increased spending in China and Europe. Business investment plans move forward, and foreign direct investment flows accordingly. Capital flows to businesses through functioning credit markets and resurgent equity issuance.

The article discusses the importance of business leaders taking steps to understand the range of opportunities and challenges created by the various economic outcomes ahead. Just as important, companies should be asking what strategic moves are needed to succeed in these new environments.

Notable from the full report In the advanced economies, inflation expectations erode US consumer confidence; ECB cuts rates amid eurozone GDP growth downgrade; UK awaits US and EU trade moves. United States. Consumer confidence was in the spotlight again as it tumbled in March and April, driven by stock market volatility and persistent inflation concerns. The Conference Board’s consumer confidence index fell by 7.2 points in March, reaching 92.9 in April—its lowest level since 2022. 0.2 Manufacturing PMI Level / March –0.4% Housing starts m-o-m / March 0.1% Real GDP y-o-y / Q1 2025 Eurozone. The European Central Bank (ECB) cut key interest rates by 25 basis points on April 17. The decision to lower rates was driven by an updated assessment of the inflation outlook, underlying inflation dynamics, and the effectiveness of monetary policy transmission. United Kingdom. Chancellor Rachel Reeves explored prospects for a US–UK trade agreement during a meeting with US Treasury Secretary Scott Bessent on April 25, ahead of a limited trade agreement announced on May 8. Meanwhile, UK and EU officials explored a “new strategic partnership” ahead of a summit on May 19. In the emerging economies, China records stronger-than-expected growth in the first quarter; India cuts rates; inflation accelerates in Brazil. China. In the first quarter of 2025, China’s GDP recorded a stronger-than-expected growth rate of 5.4% year over year (market consensus was around 5.2%), in line with the pace of growth in the fourth quarter of 2024. Consumption accounted for 51.7% of the GDP growth, trade for 39.5%, and investment for 8.7%. –0.1% Consumer inflation y-o-y / March 0.4% Real GDP growth y-o-y / Q1 2025 0.2 Manufacturing PMI Level / March India. India’s retail inflation slipped to a more-than-five-year low of 3.34% in March as food prices continued to moderate. The Reserve Bank of India lowered the key policy interest rate by 25 basis points to 6.00% on April 9—its second consecutive cut this year. Brazil. Inflation accelerated to 5.48% in March, up from 4.83% in December, marking its second consecutive monthly increase and reaching its highest level since February 2023. The inflation rate remains above the Central Bank’s upper target limit of 4.50%. Russia. Russia’s economic development ministry estimates GDP growth in January–February at 2% year over year. Published sectoral data suggest this was driven by declines in mining (oil and gas) and stabilization in manufacturing after its December peak. Total output indicators declined by 3 to 4% compared with the fourth-quarter 2024 level. Mexico. President Claudia Sheinbaum has launched Plan México, a six-year strategy to boost industrial capacity and reduce import reliance. Key initiatives this year include a $22 billion investment to upgrade the national electricity system and the expansion of the Port of Manzanillo to enhance trade infrastructure, aiming to make it Latin America’s busiest seaport.

McKinsey’s Global Economics Intelligence (GEI) provides macroeconomic data and analysis of the world economy. Each monthly release includes an executive summary on global critical trends and risks, as well as focused insights on the latest national and regional developments. View the full report for April 2025 here. Detailed visualized data for the global economy, with focused reports on selected individual economies, are also provided as PDF downloads on McKinsey.com. The reports are available free to email subscribers and through the McKinsey Insights app. To add a name to our subscriber list, click here. GEI is a joint project of McKinsey’s Strategy & Corporate Finance Practice and the McKinsey Global Institute.

ABOUT THE AUTHOR(S)

The data and analysis in McKinsey’s Global Economics Intelligence are developed by Sven Smit, a senior partner in McKinsey’s Amsterdam office; Jeffrey Condon, a senior expert in the Atlanta office; and Krzysztof Kwiatkowski, an expert in the Boston office.

The authors wish to thank Nick de Cent, as well as Darien Ghersinich, Erik Rong, Fiorella Correa, Frances Matamoros, José Álvares, Juhi Daga, Marianthi Marouli, Paula Trejos, Pragun Harjai, Ricardo Huapaya, Sebastian Vargas, Tomasz Mataczynski, and Yifei Liu for their contributions to this article.

The invasion of Ukraine continues to have deep human, as well as social and economic, impact across countries and sectors. The implications of the invasion are rapidly evolving and are inherently uncertain. As a result, this document and the data and analysis it sets out should be treated as a best-efforts perspective at a specific point in time, which seeks to help inform discussion and decisions taken by leaders of relevant organizations. The document does not set out economic or geopolitical forecasts and should not be treated as doing so. It also does not provide legal analysis, including but not limited to legal advice on sanctions or export control issues.

April 25, 2025 Global Economics Intelligence executive summary, March 2025

Geopolitical tensions and trade uncertainties dampen business sentiment, while rising inflation expectations lead to a fall in consumer confidence; Mexico and eurozone central banks cut interest rates.

Executives are now more cautious about future conditions and company performance than they were three months ago. Uncertainty about geopolitics and trade policy are the twin factors playing on respondents’ minds, McKinsey’s latest quarterly survey on business sentiment reveals. “Economic conditions outlook, March 2025” finds that surveyed executives are now equally likely to see geopolitical instability and changes in trade policy or relationships as disruptive forces (Exhibit 1). They also report more cautious views on nearly every measure this quarter compared with the previous one—and this assessment applies both to the world economy and within their countries.

For the first time since December 2022, more survey respondents anticipate global conditions to worsen over the next six months than expect improvement. Today, respondents are more likely to predict a near-term recession than they were in the final quarter of 2024, with 68% ranking a recession scenario in which rising uncertainty causes consumer sentiment to drop as the most likely outcome.

The rapidly changing economic environment has led to some central banks playing a waiting game to see how inflation develops, although a couple of banks did cut rates, albeit to different degrees. The Bank of Mexico reduced the key interest rate by a further 50 basis points to 9.0% on March 27 (following a similar cut in February) in an effort to stimulate investment and support economic activity amid signs of a slowdown. Meanwhile, the European Central Bank (ECB) chose to lower key interest rates by 25 basis points on March 6. More generally, the trend has been for economies to reduce interest rates in recent months, with the exception of Russia and Brazil, which have been hiking rates to combat high inflation.

The uncertain economic and policy environment (Exhibit 2) is weighing on growth expectations in the developed economies. The ECB’s March 2025 staff projections indicate a weaker outlook for the euro area economy, which is expected to grow by 0.9% in 2025, 1.2% in 2026, and 1.3% in 2027 (2025 and 2026 both revised down: –two percentage points). The revisions reflect weaker export activity and ongoing investment challenges, which are partly attributable to higher trade policy uncertainties. There have been growth revisions in the UK too, with the Office for Budget Responsibility announcing it had halved its 2025 growth projection to 1% but upped its 2026 forecast to 1.9%, 2027 to 1.8%, 2028 to 1.7%, and 2029 to 1.8%.

Among the emerging economies, China’s industrial output saw a more moderate expansion of 5.9% year on year in the combined January and February figures, down slightly from the 6.2% growth seen in December. In March, the 2025 government work report unveiled its key development goals for the year, including an approximate 5.0% GDP growth. India’s figures remain robust, with growth stable at 6.5%, supported by strong domestic demand.

Persistently high consumer prices continue to affect households, leading to low levels of overall consumer confidence, with a slowdown in consumer spending apparent across most surveyed economies. In the US, consumer confidence dropped again in March, this time driven by concerns of renewed inflation. Similarly, the eurozone consumer confidence indicator declined in January for the third month in a row, signaling a contraction in consumer spending. Meanwhile, in Brazil, consumer confidence continues to linger below the neutral 100 mark, falling to 83.6 in February (86.2 in January) to reach its lowest level since August 2022. Brazil’s business confidence also fell slightly, to 94.7 in February (95.0 in January), down for a fourth month running.

February retail sales in the US are considered flat in both real and nominal terms. Eurozone real retail sales fell in January by 0.3% month on month yet rose by 1.5% year on year.

Most commodity prices, including energy commodities, appeared to be stable in February, although they remain significantly higher than prepandemic levels. The price of gold—a traditional hedge in times of uncertainty—stayed above $3,000 an ounce.

Overall inflation expectations have climbed slightly in recent months but remain within the 2.0 to 2.5% range. Median inflation expectations in the US increased by 0.1 percentage points to 3.1% at the one-year horizon, while remaining unchanged at 3.0% for the three- and five-year horizons. However, US households now expect inflation to average 5% over the next year and 4% over the next five years.

Among developed economies, consumer price inflation continues to ease (showing a sideways trend), while it remains stable across the developing economies—with Russia, where inflation is accelerating, the exception.

Inflationary trends in developed economies continue to ease despite consumer concerns about the outlook. US headline CPI inflation rose 2.8% year over year through February, down from 3.0% in January, while core inflation ticked up slightly to 3.1% (annualized). In February, eurozone headline inflation was 2.3%, while core inflation was 2.6%; services inflation was 3.7%. In the UK, CPI inflation unexpectedly fell to 2.8% in February, down from January’s 3.0%, with clothing the main factor in the fall, according to the Office for National Statistics. Core CPI rose by 3.5% in the 12 months to February 2025 (January 3.7%).

Consumer inflation in developing economies has been stable in recent months, with only Russia recording accelerating momentum. Russia saw inflation accelerate further to 10% in February. India’s CPI inflation fell to a seven-month low of 3.6% in February 2025, mainly due to a decline in vegetable prices. However, core inflation (excluding food and fuel) rose to 4.1%. Brazil saw inflation rise to 5.06% in February (4.56% in January), up for the first time since December, and moving away from the Central Bank’s target upper limit of 4.50%. In Mexico, the annual inflation rate rose to 3.8% in February (up from 3.6% in January).

Both the manufacturing and services sectors showed growth in February, according to the JPMorgan Global Purchasing Managers’ Indexes (PMIs). However, country-level PMIs indicate that, while growth in manufacturing appears to be continuing in most cases, the eurozone and UK are two exceptions. Nevertheless, the OECD’s composite leading indicators, which seek to provide a six-month outlook, remain above the long-term trend for industrial production across the main economies. In contrast, services sectors showed growth across all the surveyed economies in February.

Industrial activity gave out mixed signals in the US. The industrial production index edged up to 104.2 in February, from 103.5 in January. However, the ISM Manufacturing PMI dropped to 49.8 in March (from 52.7 in February). The eurozone composite PMI remained stable at 50.2 in February; the manufacturing PMI rose to 47.6. The seasonally adjusted S&P UK Manufacturing PMI fell to a 14-month low of 46.9 in February (48.3 in January).

Among the emerging economies, India’s manufacturing PMI improved from 56.3 in February to 57.6 in March. Brazil’s manufacturing industry remained in expansion territory, with the manufacturing PMI up from 50.7 in January to 53.0 in February. The health of Brazil’s manufacturing industry improved substantially in February, as a stronger increase in new business intakes propelled production away from the contraction zone. Mexico’s manufacturing PMI, however, declined from 49.1 in January to 47.6 in February, signaling the fastest deterioration in operating conditions for five months and a continuation of a downturn that began in July 2024. February saw a continuing drop in factory orders, with international sales decreasing at their quickest rate in close to four years.

Services across developed economies remained reasonably buoyant, with the JPMorgan Global Purchasing Managers’ Index standing at 51.6. Nevertheless, in the US, the services PMI declined to 52.9 (from 56.8 in December), while the eurozone saw the services PMI drop to 50.6 in February (January: 51.3). By contrast the S&P UK Services PMI rose fractionally in February to 51.0, up from January’s 50.8.

Among emerging economies, India’s services PMI fell from 59.0 in February to 57.7 in March. In contrast, business activity among Brazilian service providers rose in February, following a decline at the start of 2025, with the services PMI rising to 50.6 in February (from 47.6 in January).

Unemployment rates were stable across most surveyed economies, with increases in Brazil and China. US unemployment edged up slightly to 4.1% in February, while nonfarm payroll rose by 151,000. China’s overall surveyed urban unemployment rate rose to 5.4% in February (5.2% in January), while the youth unemployment rate climbed to 16.9% in February (16.1% in January).

On the US financial markets, the S&P 500 declined by 1.4% in February, bringing its 12-month return to 16.8%. The Dow Jones fell 1.6% but remained up 12.4% year on year. The CBOE Volatility Index (VIX) averaged 19.6 in February, up from 16.4 in January.

World trade volumes rose by 1.1% in January, led by imports growth in advanced economies. The Container Throughput Index lifted to 133.1 points (128.9 revised points in December), with Chinese and European ports seeing an increase in throughput, reversing December’s decline. However, total port trade remains below one-year-ago levels. Global supply chain pressures increased slightly in February but continued at levels near historical averages.

US trade data reveal a widening of the US trade deficit in January. Exports rose to $269.8 billion, while imports rose to $401.2 billion, pushing the monthly deficit up by 34% to $131.4 billion. Euro area trade decreased in January compared with the previous month, dropping €15.5 billion to €1.0 billion. Goods exports increased to €232.6 billion, compared with €226.5 billion in December; imports were €231.6 billion, up by 9.9% month on month.

In January and February, cross-border trade slowed in China, with a year-on-year growth rate of −2.4% (+6.5% in December). Specifically, exports growth decelerated to 2.3% during the first two months (10.7% in December). Meanwhile, imports growth fell to −8.4% (+1.0% in December). India’s goods trade deficit fell to a 42-month low of $14.05 billion, as imports of gold, silver, and crude oil dipped; merchandise exports also declined by 10.9% year on year. Brazil’s balance of trade registered a deficit of US $0.3 billion in February (US $2.2 billion in January). In January, Mexico recorded a sharp fall in exports and a slight drop in imports, leading to a trade deficit of $4.56 billion.

Notable from the full report In the advanced economies, expectations for higher inflation have reduced US consumer confidence; EU launches the Savings and Investments Union; UK announces welfare cuts and civil service rationalization. United States. Consumer confidence dropped again in March, this time driven by concerns of renewed inflation. Households now expect inflation to average 5% over the next year and 4% over the next five years. At its March meeting, the Federal Open Market Committee (FOMC) held rates steady at 4.25 to 4.50%, where they have remained since December. The committee also downgraded its economic growth forecast, projecting GDP growth of 1.7% for 2025—down 0.4 percentage points from its December estimate. 0.7 Manufacturing PMI Level / February –0.8 S&P 500 growth Percent / March 0.8% Consumer inflation y-o-y / February Eurozone. On March 19, the European Commission launched its Savings and Investments Union to expand citizens’ access to capital markets, improve financing for companies, and support economic growth and competitiveness in the EU. United Kingdom. In her Spring Statement delivered on March 26, Chancellor Rachel Reeves confirmed welfare cuts and announced a target to reduce the administrative costs of government departments by 15% by 2030. In the emerging economies, China’s industrial output saw more moderate expansion of 5.9% year on year; India’s growth remains stable at 6.5%; Mexico recorded a sharp decline in exports. China. China’s industrial output saw a more moderate expansion of 5.9% year on year in the combined January and February figures, down slightly from the 6.2% growth seen in December 2024. Manufacturing maintained robust growth at 6.9%, albeit a deceleration from the 7.4% recorded in December. –0.7% Consumer inflation y-o-y / February 0.0% Real sales growth y-o-y / Jan-Feb 0.8 Manufacturing PMI Level / February India. Despite global economic headwinds, India’s growth remains stable at 6.5%, supported by strong domestic demand. Inflation is under control, though core inflation remains sticky, necessitating careful monetary management. Trade challenges persist due to weak global demand, but a narrowing trade deficit offers some relief. Brazil. Brazil’s manufacturing PMI climbed from 50.7 in January to 53.0 in February. Goods producers registered the fastest increase in sales since April 2024, which they attributed to more favorable demand conditions. International orders dropped, with weaker demand from Argentina, the UK, and the US. Russia. Inflation accelerated further to 10% in February, and preliminary March data suggest additional increases. In March, Russia’s central bank decided to maintain the key rate at 21%, citing decreasing but still-high inflationary pressures amid capacity constraints. The bank assumes the current level of monetary tightness is sufficient to bring inflation to target in 2026. Mexico. Mexico’s manufacturing PMI fell from 49.1 in January to 47.6 in February, signaling the fastest deterioration in operating conditions for five months and a continuation of a downturn that began in July 2024. The main reason behind February’s contraction was a continuing drop in factory orders. Notably, international sales decreased at their quickest rate in close to four years.

McKinsey’s Global Economics Intelligence (GEI) provides macroeconomic data and analysis of the world economy. Each monthly release includes an executive summary on global critical trends and risks, as well as focused insights on the latest national and regional developments. View the full report for March 2025 here. Detailed visualized data for the global economy, with focused reports on selected individual economies, are also provided as PDF downloads on McKinsey.com. The reports are available free to email subscribers and through the McKinsey Insights app. To add a name to our subscriber list, click here. GEI is a joint project of McKinsey’s Strategy & Corporate Finance Practice and the McKinsey Global Institute.

ABOUT THE AUTHOR(S)

The data and analysis in McKinsey’s Global Economics Intelligence are developed by Sven Smit, a senior partner in McKinsey’s Amsterdam office; Jeffrey Condon, a senior expert in the Atlanta office; and Krzysztof Kwiatkowski, an expert at the Boston office.

The authors wish to thank Nick de Cent, as well as Beatriz Oliviera, Darien Ghersinich, Erik Rong, Fiorella Correa, Frances Matamoros, José Álvares, Marianthi Marouli, Pragun Harjai, Ricardo Huapaya, Sebastian Vargas, Tomasz Mataczynski, Vanshika Tandon, and Yifei Liu for their contributions to this article.

The invasion of Ukraine continues to have deep human, as well as social and economic, impact across countries and sectors. The implications of the invasion are rapidly evolving and are inherently uncertain. As a result, this document and the data and analysis it sets out should be treated as a best-efforts perspective at a specific point in time, which seeks to help inform discussion and decisions taken by leaders of relevant organizations. The document does not set out economic or geopolitical forecasts and should not be treated as doing so. It also does not provide legal analysis, including but not limited to legal advice on sanctions or export control issues.

March 21, 2025 Global Economics Intelligence executive summary, February 2025

Geopolitical and trade uncertainty stayed elevated in February, with inflation back in focus as consumers and producers expect higher prices; industry sentiment is still positive despite slow growth.

Trade policy is notably uncertain, with both the monthly Global Economic Policy Uncertainty Index and the Trade Policy Uncertainty Index spiking (Exhibit 1). US consumers are of two minds: sentiment differs according to whether consumers are considering their own local economy or looking further afield, a phenomenon that can perhaps be characterized as the “I am OK, but you are not OK” economy.

This economic environment finds central bank policies divided into two camps, with many playing a waiting game to see how inflation develops. India and the UK did cut interest rates this month. On February 7, the Reserve Bank of India (RBI) reduced rates for the first time in nearly five years to counter slower growth, cutting the repo rate to 6.25% (from 6.50%). It also announced a raft of measures to inject durable liquidity into the banking system. Two days earlier, a majority of the Bank of England’s Monetary Policy Committee voted to reduce the bank rate by 0.25 percentage points, to 4.5%.

The recovery among developed markets continues, while emerging markets face some challenges. The Conference Board’s February projections anticipate real GDP growth in the eurozone to be 0.8% in 2024, 0.9% in 2025, and 1.3% in 2026—revised down by –0.1 percentage points in 2025 and –0.1 percentage points in 2026 from a month ago. In the UK, quarter-on-quarter headline GDP growth is expected to slow to about 0.4% in the first quarter of 2025, pick up to almost 1.5% by the fourth quarter of 2025, and then decline to below 1.5% in 2026. India’s fiscal year 2026 GDP growth is anticipated to be in the range of 6.3 to 6.8% in the context of current global uncertainties.

Across economies, consumer confidence has dipped as inflation expectations have risen. The US consumer confidence index (Conference Board) declined in January to 104.1, from a revised 109.5 in December. In Brazil, consumer confidence has been lingering below the neutral 100 mark and fell to 86.2 in January (91.3 in December) to reach its lowest level since February 2023, with elevated borrowing costs a likely factor in denting confidence.

Even so, consumers kept spending in December and January, attributable in part to the holiday season. US retail and food services sales for January (adjusted for seasonal variation and holiday and trading-day differences) were $723.9 billion—representing a –0.9% drop from December’s revised $730.3 billion. Consumption during the Chinese New Year holiday was robust, hinting at a change of mood among Chinese consumers, with sales revenues in consumer-related industries climbing by 10.8% year on year. Notably, China’s New Year holiday box office receipts reached another record high as moviegoers spent $1.3 billion over the eight-day holiday period.

Inflation expectations continue to climb, reaching their highest level in almost two years. US inflation expectations were unchanged at 3.0% at both the one- and three-year-ahead horizons in January, but median five-year-ahead inflation expectations rose 0.3 percentage points to 3.0%, the January Survey of Consumer Expectations reveals.

Indeed, inflationary pressures returned in January with most price metrics on the rise. Commodity prices grew in February, except for energy, which remained muted. However, higher tariffs on steel and aluminum, along with increased uncertainty, resulted in higher prices for industrial metals. In contrast, the FAO Food Price Index declined, primarily due to improved global supply conditions for sugar and vegetable oils, as well as lower meat prices driven by increased production and lower demand.

The price of gold—a traditional hedge in times of uncertainty—continued to surge on account of renewed inflation fears and the general geopolitical and economic environment, but Bitcoin declined in February on the back of security concerns and regulatory uncertainty, following initial optimism for the new US administration’s pro-cryptocurrency policy.

Inflationary trends appear to be diverging across surveyed economies (Exhibit 2). The US consumer price index (CPI) rose 3.0% for the 12 months ending January 2025, up from the 2.9% rise over the 12 months ending in December. Core inflation climbed slightly to 3.3% (annualized).

In the eurozone, January’s headline inflation is expected to be 2.5%, mainly owing to base effects in energy prices (2.9% month on month). Core inflation is expected to be 2.7% and services inflation 3.9%. Meanwhile, the UK is expected to see a sharp near-term rise in inflation, according to the Bank of England’s February Monetary Policy Report. Headline CPI inflation is expected to rise to 3.7% in the third quarter of 2025. Inflation is expected to fall back to the 2% target after that.

In China, consumer prices saw a moderate increase of 0.5% in January, up from 0.1% in December 2024. Producer prices deflated by –2.3% in January, remaining unchanged from December 2024. India is likely to see consumer inflation fall to a five-month low of 4.6% in January 2025, compared with the 5.2% recorded in December last year. Inflation also fell in Brazil, down for a second consecutive month and reaching its lowest level since September 2024, at 4.56% in January (4.83% in December). Similarly, Mexico saw the annual inflation rate drop in January, to 3.6% (from 4.2% in December), its lowest level since January 2021.

Globally, the manufacturing sector has stabilized somewhat after seven months of contraction, with sectors improving across the board, driven by production and new domestic orders. That said, companies continue to report weak external demand and reduced head count.

Looking more closely at the developed economies, we see that in the US the industrial production index increased slightly to 103.5 in January (102.9 in December), while the manufacturing purchasing managers’ index (PMI) was revised up to 51.2, beating a preliminary estimate of 50.1. The eurozone’s composite PMI edged into the expansion zone at 50.2 in January (49.6 in December), but the manufacturing PMI remained below the neutral 50.0 level, although it did rise to 46.6. In the UK, manufacturing companies face weak demand, low confidence, and rising costs. The seasonally adjusted S&P Global UK Manufacturing PMI posted 48.3 in January, up from December’s 11-month low of 47.0.

Among the emerging economies in January, China’s official manufacturing PMI fell into the contraction zone at 49.1 (down from 50.1 in December 2024), highlighting a contraction in both supply and demand within industrial activities. In contrast, India’s manufacturing PMI indicated a strong upturn in the sector, driven by rising exports as well as domestic demand.

Services, meanwhile, are starting to show signs of softening. Across developed economies, services sectors nevertheless continued to record expansion, albeit at a reduced pace. In the US, the services PMI dropped to 52.9 (56.8 in December), while the eurozone services PMI was slightly down at 51.3 in January (December: 51.6). The UK’s services PMI registered 50.8 in January, down fractionally from December’s 51.1, its joint lowest for 15 months. Among emerging economies, China’s official services PMI declined but remains in the expansion zone, recording 50.3 in January (52.0 in December 2024).

December unemployment rates remained stable across most surveyed economies, although India saw a 0.3-percentage-point rise. More recent data from the US saw unemployment edge down a little to 4.0% in January (3.5% in January 2020). China’s surveyed urban employment rate was 5.2% in January (5.1% in December 2024), while the youth unemployment rate rose slightly to 16.1% (15.7% in December).

Despite increased economic volatility, asset volatility was unchanged in February, with government bond yields remaining stable. Most markets rebounded, with a February rally on Russia’s stock market sparked by hopes that the war in Ukraine may reach a conclusion. In contrast, India’s equity market fell by 0.3% in January 2025, following a 2.4% drop in December 2024. This decline was driven by uncertainty around US trade policy, weak global signals with declining US stock futures, and concerns over AI disrupting services business in India.

World trade volume increased by 1.1% in December 2024, driven by growth across imports and exports in advanced economies. The Container Throughput Index declined to 131.2 points (133.6 in November). Chinese ports experienced a reduction in port trade, reflected in its container throughput index, while European throughput rose sharply. Total port trade remained below the year-ago level but continued to recover in December. The supply chain index indicates a more stable supply chain environment, but risks stemming from geopolitical uncertainty and potential inflationary pressures persist.

Looking more closely at individual economies, we see that December’s exports reached $266.5 billion in the US, $7.1 billion lower than November’s total. Imports were $364.9 billion, $12.4 billion more than in November. The monthly deficit increased by 24.7% to $98.4 billion. China saw an improvement in overall trade growth across the whole of 2024, with exports increasing by 5.9% (–4.7% in 2023) and imports rising by 1.1% (–5.5% in 2023). India’s trade deficit in goods widened slightly to $22.9 billion from $21.9 billion in December, potentially attributable to a rising import bill driven by a rapidly depreciating currency—the rupee lost 1.4% in value compared with the US dollar from the start of the year up to mid-February.

Notable from the full report In the advanced economies, President Trump signs memo for “fair and reciprocal” tariffs on all US trading partners; Germany looks to form a new government; inflation is up in the UK. United States. President Donald Trump signed a memorandum on February 13, calling for “fair and reciprocal” tariffs on all US trading partners, directing his advisers to begin calculating new tariff levels. 0.2 Manufacturing PMI Level / January $–0.4 Trade balance USD billions / December 0.0% Consumer inflation y-o-y / January Eurozone. On February 23, the Christian Democratic Union/Christian Social Union (CDU/CSU) alliance, led by Friedrich Merz, won Germany’s 2025 election, with Alternative for Germany (AfD) finishing second and the Social Democrats (SPD) third. The election saw a record turnout of 83.5%, the highest since reunification in 1990. United Kingdom. UK CPI rose to 3% in January, mainly driven by transport and food and alcoholic beverages, but partially offset by housing and household services. Core inflation (which excludes energy, food, alcohol, and tobacco) rose to 3.7%, from 3.2% in December. On February 6, the Bank of England’s Monetary Policy Committee voted to cut the policy rate to 4.5%. In emerging economies, China saw manufacturing expectations decline in January; India’s RBI looks to inject liquidity; Mexico’s economic outlook remains uncertain. China. The official PMI for manufacturing fell into the contraction zone, recording 49.1 in January, down from 50.1 in December 2024. Among the subindexes that make up the manufacturing PMI, the production index recorded 49.8 (down from 52.1 in December 2024), and the new orders index registered 49.2 (down from 51.0 in December 2024), indicating a contraction in both supply and demand in industrial activities. India. Liquidity in India’s banking system has been shrinking and reached its lowest level in nearly 15 years. According to a Bloomberg Economics index, on January 26 the banking system cash deficit hit 3.3 trillion rupees ($37.8 billion) for the first time since April 2010. The Reserve Bank of India (RBI) announced a host of measures to inject durable liquidity into the system, including a 60 billion rupee ($686.6 million) bond purchase, a 56-day variable repo rate auction of 50 billion rupees ($572.2 million), and a $5 billion US dollar/rupee buy/sell swap auction for a six-month tenure. Brazil. Brazil’s manufacturing industry remained in expansion territory at the beginning of the year, with the manufacturing PMI up slightly from 50.4 in December to 50.7 in January. Although factory orders continued to grow at the start of 2025, the rate of expansion was marginal and the weakest since the current growth trend began in January 2024. Russia. The 2024 value of Russian exports contracted by 1% from 2023, with the trend worsening toward the end of the year, ultimately contracting by 6% year on year in the fourth quarter. The value of oil and petroleum products increased by about 2%, reflecting higher prices, as volumes fell. Mexico. Mexico’s economic outlook for 2025 has worsened. The Bank of Mexico cut its GDP growth forecast from 1.2% to 0.6%, citing weak private investment, slowing consumption, and declining public spending. The economy had already contracted by 0.6% in the final quarter of 2024, marking its first decline since 2021. 0.6% Consumer inflation y-o-y / January 0.6% Unemployment rate Percent / December 0.1 Manufacturing PMI y-o-y / January

In other research, the McKinsey Global Institute finds that as women switch jobs, they are less likely to move into occupations projected to grow in demand, often moving instead into occupations destined to shrink. “Tough trade-offs: How time and career choices shape the gender pay gap” reports that by 2030, less than two-thirds of women could be in occupations projected to grow relative to today if the current trend continues, meaning the overall gender pay gap could remain at current levels.

The same report finds that organizations that excel in both financial performance and building human capital set themselves apart from others by rotating people internally, having a focus on coaching, and by fostering a culture that empowers employees while also challenging them. As the future of work evolves, employers can position themselves for this future by embracing these practices.

McKinsey’s Global Economics Intelligence (GEI) provides macroeconomic data and analysis of the world economy. Each monthly release includes an executive summary on global critical trends and risks, as well as focused insights on the latest national and regional developments. View the full report for February 2025 here. Detailed visualized data for the global economy, with focused reports on selected individual economies, are also provided as PDF downloads on McKinsey.com. The reports are available free to email subscribers and through the McKinsey Insights app. To add a name to our subscriber list, click here. GEI is a joint project of McKinsey’s Strategy & Corporate Finance Practice and the McKinsey Global Institute.

ABOUT THE AUTHOR(S)

The data and analysis in McKinsey’s Global Economics Intelligence are developed by Sven Smit, a senior partner in McKinsey’s Amsterdam office, Jeffrey Condon, a senior expert in the Atlanta office, and Krzysztof Kwiatkowski, an expert in the Boston office.

The authors wish to thank Nick de Cent, as well as Darien Ghersinich, Erik Rong, Fiorella Correa, Frances Matamoros, José Álvares, Juhi Daga, Marianthi Marouli, Paula Trejos, Pragun Harjai, Ricardo Huapaya, Sebastian Vargas, Tomasz Mataczynski, and Yifei Liu for their contributions to this article.

The invasion of Ukraine continues to have deep human, as well as social and economic, impact across countries and sectors. The implications of the invasion are rapidly evolving and are inherently uncertain. As a result, this document and the data and analysis it sets out should be treated as a best-efforts perspective at a specific point in time, which seeks to help inform discussion and decisions taken by leaders of relevant organizations. The document does not set out economic or geopolitical forecasts and should not be treated as doing so. It also does not provide legal analysis, including but not limited to legal advice on sanctions or export control issues.

February 25, 2025 Global Economics Intelligence executive summary, January 2025

A flurry of activity and new ideas leads to a period of ‘interpretation.’ In the meantime, growth expectations remain unchanged, while central banks begin to diverge in their policy rate decisions.

President Donald Trump took office on January 20 amid a flurry of executive orders focusing on multiple issues—many with significant economic implications. Notable instructions signed off by the returning president include measures to deport illegal migrants, an “America First” trade policy, relaxation of energy- and climate-related policies, and various orders addressing the development of artificial intelligence.

On February 1, the US president announced a 25% import tax on goods from North American neighbors Canada and Mexico (with a 10% tariff on Canadian energy), together with a 10% tariff on goods from China. After discussions between the US president and Canadian Prime Minister Justin Trudeau and Mexico’s President Claudia Sheinbaum, Trump paused the introduction of tariffs on their respective countries. However, a US tariff of 10% on Chinese imports did come into effect on February 4, followed the same day by an announcement from China of retaliatory action.

A key announcement from Trump was the $500 billion Stargate initiative, designed to expand the US artificial intelligence infrastructure. Led by OpenAI, SoftBank, and Oracle, Stargate is the largest AI infrastructure project in history. Importantly, AI is set to become a focal point for rivalry among global economic powers, not least because of the advent of China’s DeepSeek platform, which was released on January 20. As it gained traction, the new low-cost AI model rapidly became the most downloaded free app in the US. Once the markets caught up with the trend, it wiped $1 trillion off the leading US tech stock index at the start of the final week of January.

Composite leading indicators, which seek to identify turning points in economic activity approximately six months in advance, point to a potential slowdown in economic activity across all countries, except for the US and eurozone (Exhibit 1).

Despite lingering uncertainties, the outlook remains positive for modest domestic demand growth in the eurozone. In the UK, the treasury’s roundup of analysts’ growth forecasts in January sees GDP growing at 1.2% in 2025. In China, median forecasts from more than 60 financial institutions predict a GDP growth rate of 4.5% for 2025. On the Indian subcontinent, the Reserve Bank of India (RBI) has projected a GDP growth rate of 6.6% for the fiscal year 2024–25, reflecting a recovery trajectory following earlier economic slowdowns.

Overall, across surveyed economies, consumers remain cautious, with their confidence affected by relatively high food and energy prices. December saw the US consumer confidence index (Conference Board) drop to 104.7, from 111.7 in November. Consumer confidence in Brazil remains below the neutral 100 mark and fell to 92.0 in December (95.6 in November), reaching its lowest level since June. Mexico saw consumer confidence decline slightly in November to 105.0, compared with 105.3 in October.

Spending recorded a slight deceleration in November but rebounded in December, likely boosted by the holiday period. Retail sales in the two big powerhouse economies continue to be relatively buoyant, even if consumers remain largely downbeat.

Inflation expectations reached their highest level in about two years, as businesses and consumers weigh the possible impact of tariffs. Consumer prices in developed economies accelerated slightly in December, driven by higher energy prices and services costs. A similar trend can be observed in the developing economies, although China continues to fight deflation. Nevertheless, the European Central Bank (ECB) cut interest rates by 25 basis points, while the Fed kept them unchanged from last month (Exhibit 2). China’s central bank injected $300 billion to boost liquidity.

Most commodity prices rose over the past month. Oil prices picked up in January, partially because of higher demand and also due to new sanctions on Russia and Iran; European gas has been trading at around four times the price of its US counterpart.

In the US, the consumer price index (CPI) rose 2.9% for the 12 months ending in December, after rising 2.7% over the 12 months ending in November. Core inflation slightly increased to 3.2% (annualized) in December. Median inflation expectations were unchanged at 3.0% at the one-year-ahead horizon but increased to 3.0% from 2.6% at the three-year-ahead horizon, according to the December Survey of Consumer Expectations.

Eurozone headline inflation in December was up to 2.4%, mainly owing to base effects in energy prices (0.6% month over month). Core inflation stood at 2.7%. Services inflation was 4.0%, which continues to point to strong domestic price pressures, with wages growth still elevated (4.6% in the third quarter of 2024).

In Brazil, inflation fell slightly to 4.83% in December 2024 (4.87% in November), decreasing for the first time since August but remaining above the central bank’s target upper limit of 4.50% for a third consecutive month. Mexico saw the annual inflation rate drop to 4.2% in December (from 4.6% in November), its lowest in nine months.

Between manufacturing and services, the tale of two sectors continues: The end of the year brought a contraction in the manufacturing sector, while services saw an acceleration in expansion. Overall production declined, accompanied by decreasing employment and rising input costs.

In the US, the industrial production index increased to 103.2 in December (101.9 in November). January’s manufacturing purchasing managers’ index (PMI) edged up to 50.1 (from 49.4 in December). The eurozone industrial production index rose by 0.2% month over month but fell by 1.9% year over year in November. The eurozone’s composite PMI stood at 49.6 in December versus 48.3 in November, while the manufacturing PMI remained at 49.6. In the UK, the data from the industrial sector is less encouraging. A year-over-year decline of 1.8% in industrial production was recorded for November 2024, extending the downward trend observed since September 2023. Business confidence in Brazil, meanwhile, fell slightly to 97.3 in December (97.4 in November), decreasing for the second consecutive month. In December, Mexico’s manufacturing PMI dropped slightly from 49.9 in November to 49.8.

Services generally presented a brighter picture. Although the US services PMI dropped to 52.8 in January (56.8 in December), it remains well in the expansion zone. In the eurozone, the services PMI rose to 51.6 in December (November: 49.5), while in the UK, services sectors mostly strengthened in December, as new orders and consumer confidence improved.

In December, unemployment rates remained stable across most surveyed economies, but India saw a 0.3 percentage point rise. The US unemployment rate changed little at 4.1% in December (3.5% in January 2020). The UK’s unemployment rate edged up to 4.4% in October, a modest increase that could be an early warning sign of cooling economic activity. China’s surveyed urban unemployment rate was 5.1% in December 2024, down 0.1 percentage points from 2023. The adjusted youth unemployment rate, which excludes students, stood at 15.7% by the end of 2024, up from 14.9% in December 2023. In Brazil, the three-month moving average unemployment rate dropped to 6.1% in November (6.2% in October), down for the eighth consecutive time, and lower than the same period last year (7.4%). Finally, in Mexico, total unemployment increased by 0.24 percentage points in November, reaching 2.69%.

On the markets, the new year started with increased volatility, mainly due to turbulence in the world of AI. Government bonds were stable in January; Brazil has seen a significant decline in ten-year bond yields, but these remain elevated.

World trade volumes increased by 0.4% in November, driven by growth across all trade flows in advanced economies and imports in emerging economies. Total port trade remained below the year-ago level but continued to recover in December 2024. In November, exports rose in the US and eurozone but fell in China and Brazil; imports also increased in the US and eurozone versus October. While December recorded a slight increase in supply chain pressures, the global logistics environment remained relatively stable, with conditions still more favorable than the long-term average.

November saw the US record $273.4 billion in exports, $7.1 billion above October’s figure. November imports reached $351.6 billion, $11.6 billion higher than in October. The monthly deficit increased by 6.2% to $78.2 billion in November. By contrast, the euro area surplus was up to €16.4 billion in November 2024, from €8.6 billion in October. Goods exports in November 2024 fell to €248.3 billion, compared with €254.0 billion in October. Imports were €231.9 billion, down by 16.3% month over month. China’s overall trade increased by 3.8% year over year in 2024, an improvement from the –5.0% decline in 2023. Exports grew by 5.9%, compared with a –4.7% decline in 2023, and imports rose by 1.1%, recovering from a –5.5% decline in 2023.

A 2025 update of the McKinsey Global Institute (MGI) report Geopolitics and the geometry of global trade finds that Association of Southeast Asian Nations (ASEAN) countries have benefited from the US shift away from direct trade with China, with economies such as Vietnam partly intermediating trade flows between China and the US. Mexico has also benefited, with the largest trade share gains in sectors such as transportation equipment and food and beverages. Vietnam has seen the largest gains in sectors where China lost the most share. Nevertheless, a significant proportion of the value exported by ASEAN nations benefits China: In 2023, about 25% of the value of Vietnam’s electronics exports was attributable to value originally added in China.

Meanwhile, a new MGI report, Dependency and depopulation? Confronting the consequences of a new demographic reality, explores the implications of falling fertility and increasing longevity. With two-thirds of the human population living in countries with fertility below the replacement rate of 2.1 children per family, populations in some major economies will fall by 20 to 50% by 2100, according to UN projections. Advanced economies, along with China, are set to experience a reduction in the proportion of working-age citizens as a share of the total population, from 67% today to 59% in 2050. The authors estimate that in China and the advanced economies, GDP per capita growth could slow by an average of 0.4% annually from 2023 to 2050, and by up to 0.8% in some countries, unless productivity growth increases by two to four times or people work one to five hours more per week.

Notable from the full report In the advanced economies, President Trump issues a flurry of executive orders, while the Fed holds rates; energy prices rekindle eurozone inflation; the UK government pursues a growth agenda. United States. On January 20, President Donald Trump was officially sworn into office at a ceremony attended by former US presidents, foreign dignitaries, and some of the tech industry’s biggest names and wealthiest individuals. His first weeks in office have been fast-paced, with more than 50 executive actions so far, many of them focusing on federal government, immigration, and climate- and energy-related policies. 0.4 Manufacturing PMI Level / December 0.5% Real GDP growth y-o-y / Q4 2024 0.9% Consumer inflation y-o-y / December Eurozone. The European Central Bank (ECB) cut key interest rates by 25 basis points on January 30. Despite somewhat stickier headline inflation, the sluggishness of the eurozone economy as well as the ECB’s conviction that inflation will return to target were strong arguments in this decision. United Kingdom. The treasury’s roundup of analysts’ growth forecasts in January sees GDP growing at 1.2% in 2025—exactly what was predicted back in February 2024. Sluggish growth and diminished business confidence since last autumn’s minibudget (in addition to multiple external factors) are potentially constraining the UK government’s spending plans, so senior ministers have sought to emphasize a drive for growth, dubbing it their “defining mission.” In emerging economies, China’s economy grew 5.0% in 2024, with India’s economy ending the year on a strong note; Mexico prepares for tariffs. China. China’s population declined for the third consecutive year in 2024, falling by 1.39 million to 1.408 billion. This decline was driven by the number of deaths outpacing the number of newborns, though there was a slight increase in the number of newborns, rising to 9.54 million in 2024, from 9.02 million in 2023. 0.1% Consumer inflation y-o-y / December 0.4% Real GDP growth y-o-y / Q4 2024 0.2 Manufacturing PMI Level / December India. The Reserve Bank of India has projected a GDP growth rate of 6.6% for the fiscal year 2024–25, reflecting a recovery trajectory following earlier economic slowdowns. The World Bank projects that India’s GDP will expand by 6.6% in 2025. Brazil. December data showed a further slowdown in growth across Brazil’s private sector; both factory production and services activity increased at softer rates. The composite purchasing managers’ index fell from 53.5 in November to 51.5 in December, indicating a slower pace of expansion (the weakest in 2024), but which nevertheless remained within the expansion zone for a 15th consecutive month. Russia. At the moment, Russian fiscal and monetary policies are contradictory. The increase in government spending has fueled inflation, which has forced the Central Bank of Russia (CBR) to raise rates to unprecedented levels to cope with the situation. The CBR’s key rate currently stands at an all-time high of 21%. The intense debates over monetary policy are likely to continue. Mexico. In January 2025, President Claudia Sheinbaum introduced “Plan México,” a comprehensive strategy aimed at strengthening regional markets, attracting investment, and driving industrial development. The plan focuses on harnessing trade agreements, implementing favorable tariff policies, and enhancing customs enforcement to position Mexico as a global economic powerhouse.

McKinsey’s Global Economics Intelligence (GEI) provides macroeconomic data and analysis of the world economy. Each monthly release includes an executive summary on global critical trends and risks, as well as focused insights on the latest national and regional developments. View the full report for January 2025 here. Detailed visualized data for the global economy, with focused reports on selected individual economies, are also provided as PDF downloads on McKinsey.com. The reports are available free to email subscribers and through the McKinsey Insights app. To add a name to our subscriber list, click here. GEI is a joint project of McKinsey’s Strategy & Corporate Finance Practice and the McKinsey Global Institute.

ABOUT THE AUTHOR(S)

The data and analysis in McKinsey’s Global Economics Intelligence are developed by Sven Smit, a senior partner in McKinsey’s Amsterdam office, Jeffrey Condon, a senior expert in the Atlanta office, and Krzysztof Kwiatkowski, an expert in the Boston office.

The authors wish to thank Nick de Cent, as well as Cristina Barrantes, Darien Ghersinich, Erik Rong, Frances Matamoros, José Álvares, Marianthi Marouli, Mario Rojas, Roman Büschgens, Sebastian Vargas, Tomasz Mataczynski, Valeria Valverde, and Yifei Liu for their contributions to this article.

The invasion of Ukraine continues to have deep human, as well as social and economic, impact across countries and sectors. The implications of the invasion are rapidly evolving and are inherently uncertain. As a result, this document and the data and analysis it sets out should be treated as a best-efforts perspective at a specific point in time, which seeks to help inform discussion and decisions taken by leaders of relevant organizations. The document does not set out economic or geopolitical forecasts and should not be treated as doing so. It also does not provide legal analysis, including but not limited to legal advice on sanctions or export control issues.

Summary

Companies Dow -0.22%, S&P 500 flat, Nasdaq +0.32%

Services contracted in May for the first time in nearly a year

CrowdStrike falls on downbeat quarterly revenue forecast

Fed lifts asset cap on Wells Fargo, shares hit 3-month high

GlobalFoundaries up on plans to increase investments

NEW YORK, June 4 (Reuters) – U.S. stocks ended mixed on Wednesday, with the benchmark S&P 500 flat, the technology-heavy Nasdaq Composite slightly up and the Dow Jones Industrial Average down as weak data revealed the economic toll taken by President Donald Trump’s trade policies.

The services sector contracted in May for the first time in nearly a year, while businesses paid higher input prices, a reminder that the economy was still at risk of slowing growth and rising inflation. Early gains in the S&P 500 evaporated toward the close and trading volume was relatively light.

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“Tariff impacts are likely elevating prices paid by services sector companies,” said Jeffrey Roach, chief economist for LPL Financial.

The ADP National Employment Report showed U.S. private employers in May added the fewest number of workers in more than two years. Investors await Friday’s nonfarm-payrolls data for more signs on how trade uncertainty is affecting the U.S. labor market.

Washington doubled tariffs on imported steel and aluminum to 50%, and Wednesday was also Trump’s deadline for trading partners to make their best offers to avoid other punishing import levies from taking effect in early July.

Investors focused on tariff negotiations between Washington and trading partners, with Trump and Chinese leader Xi Jinping expected to speak sometime this week as tensions simmer between the world’s two biggest economies.

“If we can’t get to an agreement on China, the tariff battle will be a headline issue for many months to come and will have an impact on both domestic and international economies,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.

The S&P 500 remains more than 2% below record highs touched in February.

Barclays joined a slew of brokerages in raising its year-end price target for the S&P 500, pointing to easing trade uncertainty and expectations of normalized earnings growth in 2026.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 30, 2025. REUTERS/Jeenah Moon/File Photo Purchase Licensing Rights , opens new tab

Shares of the fourth-largest U.S. bank Wells Fargo (WFC.N) , opens new tab ended 0.4% lower, although they briefly hit a three-month high after the Federal Reserve lifted a longstanding $1.95 trillion cap on its assets.

Wells Fargo CEO Charlie Scharf told Reuters he expects the bank to grow in all businesses including wealth, commercial and investment banking and credit cards, but not mortgages.

Volume on U.S. exchanges was relatively light, with 14.5 billion shares traded, compared to an average of 17.8 billion shares over the previous 20 sessions.

Advancing issues outnumbered decliners by a 1.3-to-1 ratio on the NYSE. There were 223 new highs and 45 new lows on the NYSE.

On the Nasdaq, advancing issues outnumbered decliners by a 1.18-to-1 ratio.

The S&P 500 posted 23 new 52-week highs and no new lows while the Nasdaq Composite recorded 84 new highs and 35 new lows.

Reporting by Kanchana Chakravarty and Sukriti Gupta in Bengaluru and Saeed Azhar in New York; Editing by Devika Syamnath and David Gregorio

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Nearly half of businesses expect the economy to improve in the next 12 months, including 60% of middle market companies and 44% of small businesses—a four-year high

Small Business: 12-month outlook jumps 14 points; key growth indicators rebound from 2024

Middle Market: Strong optimism persists as 69% prioritize growth over cost-cutting

Tariff Impact: 5 in 10 plan to stockpile inventory, absorb cost increases

Generative AI: Adoption leading to increased staffing levels

Cybersecurity: 3 in 10 feel very well prepared to prevent attacks

TACOMA, Wash. , June 17, 2025 /PRNewswire/ — Umpqua Bank today released the findings of its seventh annual Business Barometer, a nationwide study into the mindset and priorities of small and middle market businesses. Despite a mixed outlook over the economic headwinds, including the potential impact of global tariffs, businesses across the U.S. report measured optimism about the direction of the economy and their 12-month prospects for growth compared to a year ago.

Umpqua Bank’s 2025 Business Barometer survey polled nearly 1,300 small businesses ( $500 K- $10M ) and middle market companies ( $10M – $500M ) across the U.S. about their economic outlook, business prospects, investment opportunities and adaptions to a range of issues including AI, cybersecurity and tariffs.

While inflation persists as a top concern for 60% , and 51% expect negative impacts from tariffs, overall optimism about the current economy remains strong for middle market companies ( 62% ) and is up slightly for small businesses ( 32% ). The 12-month outlook also spiked to near or at four-year highs for both sectors. Nearly 5 in 10 of all businesses surveyed anticipate improved conditions, and a record number of middle market ( 66% ) and small businesses ( 36% ) will likely seek financing for growth in the year ahead.

“This year’s survey reminds us once again why small and middle market businesses are the backbone of our economy. Their grit and determination are sturdy enough to withstand current economic and global trade uncertainty,” said Umpqua Bank President Tory Nixon. “After optimizing their businesses through a pandemic and the ensuing challenges of the past few years, decision-makers remain clear-eyed about potential headwinds and clear-headed about what’s needed to move forward.”

2025 Business Barometer Highlights:

Nearly half of all businesses expect the economy to improve in the next 12 months, including 60% of middle market companies and 44% of small businesses—a four-year high.

of middle market companies and of small businesses—a four-year high. Inflation ( 60% ), recession ( 42% ) and tariffs ( 41% ), rank as the top three concerns.

), recession ( ) and tariffs ( ), rank as the top three concerns. 5 in 10 expect revenue and demand for products and services to increase.

69% of middle market companies and 34% of small businesses are prioritizing growth over cost-cutting.

of middle market companies and of small businesses are prioritizing growth over cost-cutting. Roughly half, including 72% of middle market companies and 41% of small businesses, are likely to stockpile inventory over the next 12 months in response to potential tariffs.

of middle market companies and of small businesses, are likely to stockpile inventory over the next 12 months in response to potential tariffs. 52% of middle market companies say reshoring manufacturing operations would take at least three or more years; 1 in 5 small businesses say it’s not feasible to do so.

of middle market companies say reshoring manufacturing operations would take at least three or more years; 1 in 5 small businesses say it’s not feasible to do so. 85% of middle market and 50% of small businesses plan to invest in or adopt additional generative AI capabilities in the year ahead.

of middle market and of small businesses plan to invest in or adopt additional generative AI capabilities in the year ahead. 25% of middle market companies and 16% of small businesses were impacted by cybersecurity attacks in the past year.

Still Cautious, More Small Businesses Plan for Growth

Small businesses are more likely to cut costs this year than make investments ( 55% vs. 32% ), and 82% plan to conserve cash. However, compared to a year ago, they are significantly less likely to prioritize managing financial concerns ( 27% vs 45% in 2024) and more likely to focus on growth opportunities ( 28% vs. 18% in 2024). Their improved mindset bears out across key growth indicators as they are more likely this year than last to finance expansion (+11 points), invest in digitization (+8) and financial safeguards (+7), add real estate (+7) and either merge (+9) or acquire (+4) another business.

Still Optimistic, Middle Market Balances Growth and Fiscal Management Priorities

Down slightly from last year, overall optimism remains near an all-time high for middle market companies, and most expect increases in product demand ( 65% ), revenue ( 62% ) and profitability ( 56% ). Nearly 7 in 10 will prioritize investments over cost-cutting, though 82% also plan to conserve cash. More this year are also focused on managing financial challenges (+4 points) primarily due to increased concern over tariffs and other external factors.

Tariff Response: Measured Steps Not Drastic Changes

Businesses of all sizes believe any tariff impacts are more likely to be negative than positive, and 41% rank tariffs as a top three concern. In response, those with operations, sales or supply chains directly impacted have already taken measured steps to manage potential impacts: 54% have plans in place for managing price fluctuations, 50% have strengthened relationships with existing customers, 46% have looked for new domestic suppliers and 34% have moved up the timeline for planned sales. Moving forward, 53% are preparing to gradually increase prices, with 47% intending to absorb as much of the increased costs as possible. Nearly half, including 72% of middle market companies, are also likely to stockpile inventory in the near term.

While many enterprises with international operations are adjusting manufacturing or supply chains, more than 7 in 10 still plan to maintain or increase their current levels of foreign trade activity and exposure.

Generative AI Adoption Continues, Positively Impacts Employment Levels

For the second straight year, AI is the top investment priority for the middle market. More than 8 in 10 middle market and half of small businesses plan to invest in new generative AI tools over the next 12 months. Both segments feel confident in their pace of AI adoption compared to peers: Roughly 7 in 10 small businesses and nearly 9 in 10 middle market companies report keeping up with or surpassing competitors. Only 5% of all businesses surveyed say adoption is leading to decreased staffing levels. By contrast, 57% of middle market and 22% of small businesses say adopting AI actually is leading to increased staffing levels.

Businesses Move to Prevent Cybersecurity Attacks; 3 in 10 “Very Well Prepared”

In the last 12 months, most businesses have prioritized cybersecurity and anti-fraud enhancements, a trend most pronounced among middle market companies. Safeguards for all businesses surveyed include employee trainings ( 67% ), using bank fraud prevention solutions ( 61% ), tightening internal controls ( 60% ) and conducting regular audits to identify vulnerabilities ( 53% ). While 82% feel at least moderately well prepared to prevent an attack, just 3 in 10 feel very well prepared.

Survey Methodology

The Umpqua Bank 2025 Business Barometer, conducted annually, surveyed 1,290 owners, executives and financial decision-makers from U.S. small and middle market companies. The online survey was conducted in partnership with DHM Research, a public policy and business research firm, and targeted leaders at companies with $500,000 to $500 million in annual revenue. The survey, which did not filter for Umpqua Bank customers, has a 2.7% margin of error and was fielded from April 21 to May 2, 2025.

About Umpqua Bank

Umpqua Bank, a subsidiary of Columbia Banking System, Inc. (Nasdaq: COLB), is an award-winning regional financial institution supporting businesses of all sizes and consumers across eight western states. With more than $50 billion in assets, Umpqua is the largest Northwest-based and third largest publicly traded bank on the West Coast. Through a network of nearly 300 branches and a full suite of commercial and retail capabilities, Umpqua is taking its celebrated brand of relationship banking across the West into some of the most dynamic and economically vibrant markets in the country. For its commitment to exceptional customer service and thriving communities, Umpqua has been named one of ” Oregon’s Most Admired Companies” for 20 straight years.

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Germany’s economic sentiment staged a strong rebound in May, recovering from its lowest levels in over two years, as easing trade tensions and political stability lifted the business outlook.

According to the latest ZEW Economic Sentiment survey, the indicator rose to 25.2 points, up from minus 14 in April which was the weakest reading since July 2023.

The recovery far outpaced analysts’ expectations of 11.9, reflecting renewed confidence across key sectors.

“Expectations are brightening,” ZEW President, Professor Achim Wambach, PhD, said, noting that the formation of the new federal government, the progress in the tariff disputes, and a stabilising inflation rate are contributing to the increased optimism.

The eurozone saw a similarly strong recovery, with sentiment climbing to 11.6 points in May from minus 18.5 in April, well above expectations of minus 3.5. The current economic assessment for the monetary union also improved, rising 8.5 points to minus 42.4. Despite this upbeat forward-looking sentiment, Germany’s current economic conditions remain grim, with the corresponding index dipping a further 0.8 points to minus 82.0 — among the lowest levels in recent years.

Outlook brightens across key sectors

The ZEW survey highlighted growing optimism for the next six months, citing improvements in banking, automotive, chemical, metal, machinery and steel industries.

Stabilising inflation, a more predictable trade environment, and hopes for further interest rate cuts by the European Central Bank are fuelling expectations of a broader recovery.

A rebound in domestic demand and a revival in the construction sector are also anticipated, offering a more balanced growth outlook after months of stagnation.

Market reaction: DAX steadies after record run

German stocks showed only modest gains on Tuesday, as the DAX index rose 0.2% to 23,600. A day earlier, the leading German stock market index opened at over 23,900 points, setting new record highs, buoyed by optimism over a US-China trade truce.

Among top movers, Bayer rose 8.5% after beating earnings expectations for the first quarter. The German pharmaceutical giant posted a 7.4% decline in adjusted EBITDA to €4.09 billion, but the figure surpassed analyst forecasts thanks to strong demand for new prescription drugs, which helped offset weakness in its crop science division. The company confirmed its full-year outlook and continued with a cost-cutting programme that included 2,000 job reductions in the first three months of the year.

Related Bayer shares soar as company records strong cancer drug demand

Shares of major German automakers also advanced. Volkswagen gained 1.8%, while BMW, Porsche and Mercedes-Benz were each up by about 1%, supported by improving export prospects.

Losses were led by Germany’s two largest reinsurers. Munich Re fell% and Hannover Rueck dropped 2.8%, after reporting hits to their first-quarter profits due to claims linked to wildfires in Los Angeles.

Vonovia declined 3.5% after announcing the issuance of €1.3 billion in convertible bonds.

Fraport, the operator of Frankfurt Airport, saw its shares fall 1.8% after reporting a sharper-than-expected 16.5 percent drop in first-quarter EBITDA to €177.5 million. The company cited rising personnel and regulatory costs in Germany as key headwinds. While full-year guidance was maintained, the weak margin performance weighed on investor sentiment.

From 9 May 2025 12.38 BST Trump: China tariffs should be 80% Newsflash: Donald Trump has suggested that the US tariffs on Chinese goods should be 80%. Posting on his Truth Social site, the US president says: 80% Tariff on China seems right! Up to Scott B. Scott B is presumably Treasury secretary Bessent, who is due to meet with Chinese Vice Premier He Lifeng in Switzerland this weekend to discuss the trade war. An 80% tariff would be a notable reduction on the 145% which Trump imposed last month, but would still make it significantly more expensive for US companies to import goods from China than before the trade war began. Trump has also urged Beijing to open up its markets, posting: CHINA SHOULD OPEN UP ITS MARKET TO USA — WOULD BE SO GOOD FOR THEM!!! CLOSED MARKETS DON’T WORK ANYMORE!!! Reminder: trade data from China earlier today showed a drop in shipments to, and from, the US. Share Updated at 13.27 BST

9 May 2025 15.36 BST Switzerland and the United States have agreed to accelerate their trade talks and are determined to reach an agreement quickly, Swiss President Karin Keller-Sutter has revealed. Keller-Sutter was speaking at a news conference after meeting US treasury secretary Scott Bessent and chief trade negotiator Jamieson Greer in Geneva, ahead of their talks with China this weekend. Share

9 May 2025 14.37 BST Wall Street rises amid hopes of US-China trade war progress Wall Street has opened a little higher, as traders grasp onto hopes of progress in the US-China trade war. The main indices have all risen in early trading, as investors eye this weekend’s negotiations in Switzerland, and digest Donald Trump’s suggestion that China’s tariffs could be cut to 80%. Here are the early moves: Dow Jones industral average : up 123 points or 0.3% at 41,491 points

S&P 500 : up 25 points or 0.45% at 5,689

Nasdaq Composite: up 132 points or 0.75% at 18,060 That follows gains in Europe today, where Germany’s DAX index hit a new all-time high. Hopes of a thawing in US-China trade tensions are boosting stocks, reports Fawad Razaqzada, market analyst at City Index: Bullish momentum picked up for global stocks after reports emerged that the US is considering reducing tariffs on Chinese goods to below 60%, a significant pullback from the punitive 100%+ levies imposed earlier. However, Trump has posted on his social account that the levy could be reduced to only 80%, which “seems right” according to him, although that it is up Scott Bessant ahead of the weekend talks with Beijing. Meanwhile, China’s exports to the US have already taken a hit, with the latest data showing a marked slump. But the real damage from those tariffs is only just starting to show. Markets, though, are forward-looking—and any sign of easing tensions is enough to get investors back into risk assets, as we have seen in the last few weeks. Share

9 May 2025 14.24 BST Australia’s Macquarie Group has snapped up a UK smart meter rental business. Spain’s Iberdrola has agreed to sell its SP Smart Meters Assets – which it owns through Scottish Power – to Macquarie Group for almost £900m. The sale to Macquarie, whose previous investments include now-troubled Thames Water, is expected to complete in the third quarter of the year. Earlier today Macquarie also warned that global trade is under “the most intense pressure for decades”, as it reported a 5% increase in annual profits in the last year. Share

9 May 2025 13.31 BST Donald Trump’s suggestion that tariffs on China should be cut to 80% may have disappointed some investors. Earlier today, Bloomberg reported that the US had set a target of reducing tariffs below 60%, as a first step that they felt China may be prepared to match. Share

9 May 2025 12.38 BST Trump: China tariffs should be 80% Newsflash: Donald Trump has suggested that the US tariffs on Chinese goods should be 80%. Posting on his Truth Social site, the US president says: 80% Tariff on China seems right! Up to Scott B. Scott B is presumably Treasury secretary Bessent, who is due to meet with Chinese Vice Premier He Lifeng in Switzerland this weekend to discuss the trade war. An 80% tariff would be a notable reduction on the 145% which Trump imposed last month, but would still make it significantly more expensive for US companies to import goods from China than before the trade war began. Trump has also urged Beijing to open up its markets, posting: CHINA SHOULD OPEN UP ITS MARKET TO USA — WOULD BE SO GOOD FOR THEM!!! CLOSED MARKETS DON’T WORK ANYMORE!!! Reminder: trade data from China earlier today showed a drop in shipments to, and from, the US. Share Updated at 13.27 BST

9 May 2025 12.18 BST European Commission President Ursula von der Leyen has suggested she could visit Washington to meet President Donald Trump to discuss trade negotiations – but, crucially, once a “concrete” trade package is on the table. Speaking in Brussels today, von der Leyen said: “If I go to the White House, I want to have a package we can discuss. It has to be concrete, and I want to have a solution that we both can agree on. That is the work we are doing right now.” More here. Share

9 May 2025 11.31 BST An index of fear in European stock markets has dropped to its lowest level since just before Donald Trump’s ‘Liberation Day’ tariff announcement at the start of April. The Euro Stoxx Volatility Index has fallen by 2% today to around 20 points, its lowest since 28 March. In the days after Trump kicked off his trade war the index had hit a three-year high over 50 points, before falling back after the US president paused his global tariffs for 90 days. View image in fullscreen Photograph: LSEG Share

9 May 2025 11.19 BST Britain’s new trade deal with the US could lead to more foreign investment into the UK, explains Professor Costas Milas, of the University of Liverpool’s management school: However “incomplete” the new US-UK deal might look and be, it signals smooth long-term business relationships between the U.S. and the UK. In fact, foreign car companies and those involved in production of steel and aluminum might be tempted to increase foreign direct investments (FDIs) in the UK to get indirect access to the U.S. market. As I explained in a recent co-authored paper, additional FDIs will translate into higher wages and productivity in the UK. The US-UK deal is reasonably good news. Share

9 May 2025 11.07 BST Goldman Sachs are sticking with their view that the Bank of England will cut interest rates sharply in the second half of this year, and in early 2026. Following yesterday’s quarter-point rate cut to 4.25%, in a split decision, Goldman don’t expect another cut in June. But it then expects cuts at every meeting from August until next March, which would mean six reductions, reducing rates by 1.5 percentage points. Goldman says: Given today’s signals towards a continued quarterly pace of cuts, we no longer expect the MPC to cut Bank Rate at the June meeting, as this would likely require material downside surprises in the near-term data. That said, we maintain our view that a weaker economy—including softer growth, pay gains and inflation—will push the MPC into faster rate cuts in H2. We therefore now expect a pause in June but maintain our forecast for sequential 25bp rate cuts from August to an unchanged terminal rate of 2.75% in March 2026 (versus February before). Share Updated at 12.46 BST

9 May 2025 10.40 BST German manufacturer Siemens Energy (+2.7%) is leading the risers on the DAX this morning. It’s followed by pharmaceuticals group Merck Group (+1.86%) and carmaker BMW (+1.8%), two companies exposed to the US trade war, who would benefit from an easing of tensions. Share Updated at 10.40 BST

9 May 2025 10.28 BST Back in Reykjavík, Bank of England governor Andrew Bailey has pointed out that the US-UK trade deal still leaves tariffs on most British exports to the US higher than before April. Bailey also reiterated that the deal was good news, saying: “It’s good news in a world where it will leave the effective tariff rate higher than it was before all of this started.” Share

9 May 2025 10.17 BST Jochen Stanzl, chief market analyst at CMC Markets, has explained why Germany’s DAX share index has the potential to push higher, setting new record highs: The framework established by Trump’s London pact is essentially a loosely defined intention that primarily provides the U.S. president with an exit strategy: it allows him to claim later that he does not need to reactivate the reciprocal tariffs. The markets celebrate this agreement not because it shines in every detail but because this rough framework might be sufficient to maintain the temporary suspension of countersanctions permanently. The DAX continues its upward trend, with the record high tantalizingly close. With the Friedrich Merz government poised to unveil its Agenda 2030, it is a good moment to examine the current state of the DAX. Analysts anticipate an average earnings growth of six percent over the next twelve months, followed by almost thirteen percent in the subsequent year. The current price-to-earnings ratio (P/E ratio) of around 17 suggests that the index could rise to 24,700 points solely based on expected earnings growth over the next twelve months, eventually reaching 27,900 points in two years—assuming investors continue to accept a relatively high valuation level. From a political and economic standpoint, this potential arises in two ways: Firstly, the prospect of expansive fiscal programs—such as increased spending on infrastructure, energy, and defense—will drive revenues and profits for DAX-listed companies. Secondly, the gradual normalization of monetary policy following the inflation surge in recent years is likely to lower interest rates, further supporting stock prices. Share