How different will 2025 be from 2024?

BNP Paribas Team BNP Paribas

The year 2024 is coming to an end, but political and economic uncertainties persist and are expected to continue into 2025, albeit in new forms. Donald Trump’s economic agenda is known. On the other hand, the measures that will actually be implemented, their timing and their economic impact are among the great known unknowns of 2025. In any case, uncertainty itself is expected to be a major drag on growth next year. A convergence of growth rates between the US and the Eurozone is expected in the course of 2025, via a slowdown in US growth. The latter would suffer from the inflationary effects of Trumponomics and the resulting more restrictive monetary policy, with the Fed's expected status quo on rates throughout 2025. In the euro area, the expected strengthening of growth would remain limited and constrained, but the return of inflation to the 2% target would be secured, allowing the ECB to continue its rate cuts. 2025 would thus be marked by the beginning of convergence of growth rates between the United States and the euro area, but by divergent inflation trajectories and a decoupling of monetary policies. Next year should also be different from 2024 by a likely rise in unemployment rates. The possibility of a European revival and the potential introduction of bolder measures to address the region’s structural challenges are among the upside risks.

2024 is not quite over yet and there is still a lot of uncertainty as the year draws to a close, but the focus is already on 2025. How different or similar will next year be to this year?

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BNP Paribas Team

BNP Paribas

BNP Paribas Economic Research Department is a worldwide function, part of Corporate and Investment Banking, at the service of both the Bank and its customers.

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