QNB says the year-end increase in growth reflects the strength of major economies
The Qatar National Bank (QNB), in its weekly report, said that the forecasts for higher growth in major economies around the world at the end of the year compared to the beginning of 2025 are not because global risks have decreased, but because these economies have the ability to adapt to the shock of rapid changes and growing uncertainty.
QNB said that “forecasts were no longer on a constant linear path, but rather the result of a delicate balance between shocks and resilience, and between risks and opportunities”.
Year-end forecasts for China and the Euro area are better than at the beginning of the year, said QNB, while expectations for the United States have fallen slightly, resulting in global economic growth of 3 percent.
Although there was cautious optimism at the beginning of the year, as estimates pointed to continued global economic growth supported by a reduction in inflation, the continued easing of monetary policy, the recovery of the US economy, and the expected cyclical recovery both in the Euro area and in China, things soon turned for the worse.
These expectations “are being put to a severe test as US economic policy changes”, the report said. Market conditions began to decline in February, before concerns intensified on April 2, when the new US administration announced unprecedented tariffs on imports. The sudden reversal has reignited fears of a trade war and reopened talks about the possibility of a global recession.
Global economic growth forecasts were cut to 2.6 percent in that period, QNB said, marking the fastest downward revision in a short period of time.
However, this gloomy picture did not last long, as prospects gradually improved when it became clear that the effects of the trade shock were not as bad as initially feared.
Major economies are fueling global growth
The report examined the factors that contributed to the reversal of growth forecasts for the three largest economies (the United States, China, and the Euro area), which together account for nearly 60 percent of the global economy.
The US economy “showed remarkable resilience, supported by strong private consumption and continued investment”. The labor market remained strong, with the unemployment rate close to full employment and real wage growth outpacing inflation. This was boosted by the expansion of the stock market, which increased overall wealth and improved spending power.
With favorable fiscal and monetary conditions, the US economic growth forecasts improved to about 1.9 percent in 2025.
In the Euro area, the recovery was driven by easing inflationary pressures, which allowed the European Central Bank to cut interest rates significantly and move monetary policy from its restrictive stance. The growth of real wages and the continued stability of the labor market are supported by consumption, which is consistent with the role of European Union programs in stimulating investment.
As for China, structural changes have played a major role in improving forecasts. More supportive policies for the private sector, and growing optimism about the country’s capabilities in advanced technology and artificial intelligence, have helped boost confidence.
The report added that “the Chinese economy has continued its transition from reliance on traditional industries to high value-added products, strengthening its position in global supply chains”. Despite ongoing trade disputes, estimates improved and showed growth of 5 percent annually.
