Global Economic Outlook – June 2025

From momentum to confusion: global macro at the 2025 halfway

mark
“Reflecting on the global economy at the midpoint in the year reveals a shift towards more uncertain paths for growth and inflation;
however, the likelihood of a wide-ranging deceleration in output in the near term appears to have increased. Global economic
growth looks set to face significant headwinds that are unlikely to abate in the second half of the year. Increased costs associated with
trade friction and barriers to trade are chief among these headwinds. U.S. trade restrictions are likely to remain in place in some form
for the foreseeable future, despite legal challenges on the legitimacy of universal tariffs. Inflation has broadly moderated across
advanced and emerging economies on trend, though monetary policy responses remain cautious, uneven and desynchronized.
The flurry of policymaking in the first half of 2025 has formed conditions for the second half of the year. Businesses are left looking at
a complex global operating environment shaped by fragmenting trade relationships and supply chains, unsynchronized monetary
policy, and inflationary pressures. They face making decisions with incomplete and rapidly changing information. The key is agility:
navigating regulatory divergence and identifying growth opportunities. Global macroeconomics is entering a more complex phase,
one that rewards businesses able to adapt quickly and pivot in response to unexpected developments.”
Dr. Arun Singh, Global Chief Economist, Dun & Bradstreet.

Real GDP Growth (%)

3.9
3.8
3.6 3.6 3.6 3.6
3.4
3.2 3.1

2.8
2.7 2.7 2.6 2.7
2.4 2.4

2.02.0
1.8
1.7 1.7
1.5 1.5
1.4 1.3 1.41.4
1.2
1.0

0.5

Asia Pacific Sub-Saharan Eastern Middle East World North Latin OECD Western & The Nordics
Africa Europe & & North America America Central
Central Asia Africa Europe

2024 2025 2026

Source: Haver Analytics; forecasts from Dun & Bradstreet

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Recent Developments

Global

• At the end of May, the U.S. Court of International Trade ruled that some recent U.S.
tariffs exceeded the government’s authority. The U.S. government appealed the
judgment, and the U.S. Court of Appeals for the Federal Court temporarily reinstated
the tariffs. Separately, in early June, talks between the U.S. and the Chinese
Mainland have progressed following bilateral discussions in London.

• In the same month, leaders from 45 European countries gathered in Albania for the
sixth European Political Community Summit to discuss increasing economic
competitiveness.

• The Chinese Mainland and countries from the Association of Southeast Asian
Nations (ASEAN) and the Gulf Cooperation Council (GCC) met at a summit in
Malaysia on May 27 to discuss broadening trade agreements. The ASEAN
announced a five-year strategic plan aiming to deepen integration among
members.

• Colombia has agreed to participate in Beijing's Belt and Road Initiative, enhancing
cooperation in trade and infrastructure.

• In a sign of investor confidence, Argentina has raised USD1bn via a peso -

denominated sovereign bond.

• The Democratic Alliance coalition won the Portuguese legislative election in May ,
with the far-right Chega party becoming the official opposition. The rise of Chega
has been rapid: in six years it has gone from one seat to 60 of 230 in parliament.

• India's economy grew 7.4% in Q1 2025, up from 6.4% in the previous quarter,
fueled by construction and manufacturing growth.

• International pressure on Israel grew in May as attacks intensified on Gaza. The U .S.
has proposed to Hamas an Israeli-backed ceasefire.

Movement in Country Rating & Environment Risks

Environment Risks
Country Rating
Credit Market Supply Political

Bolivia Costa Rica Gabon

Syria Qatar Syria Gabon Singapore
Bolivia Singapore Uganda Syria India
South Korea Hong Kong (S.A.R.) Turkey

Note: Colors indicate rating upgrade/improvement in outlook, rating downgrade/deterioration in outlook

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North America

• The U.S. government has been granted a temporary reinstatement of tariffs by the
U.S. Court of Appeals for the Federal Court, following a ruling by a different court
that some of recently imposed tariffs exceeded the government’s authority. At the
start of June, a clampdown by the U.S. on immigration led to sustained protests in
Los Angeles. As part of the clampdown, the U.S. barred citizens of 12 countries,
including Iran and Afghanistan, from traveling to the U.S.

• The U.S. budget bill (tax and spending legislation) has passed the House of
Representatives and moved on to the Senate. The bill seeks to cut U .S. taxes on
(among other things) income tax, tips, and overtime pay, and includes tax breaks
for businesses, as well as extra funding for enhanced border security along the
southern border with Mexico.

• The U.S. government has established a second military zone along the southern
border with Mexico; troops are able to conduct searches and detain migrants in
Texas.

• On May 22, the Supreme Court of the U.S. ruled that the Federal Reserve's
independence was secure and that the central bank enjoyed additional protections,
implying that the government is not able to remove the current Fed governor.

• King Charles III opened the Canadian parliament in May, introducing the
government’s direction over the forthcoming session.

• Canada has introduced large-scale visa policy reforms aimed at improving the
distinction between high-risk applicants and those from genuine families and
students.

• Through Q1 and Q2 2025, the U.S. dollar depreciated before clawing back some
value, settling in the range of USD1.13-1.14:EUR. The pause in dollar losses
seemed to coincide with news that the U.S. was potentially willing to negotiate
trade and tariff deals.

Western and Central Europe

• In May, the U.S. proposed a 50% tariff on imports from the EU; however, the tariff
has been paused until July 9 to allow the two sides to negotiate a deal to avoid a
sharp rise in trade friction for businesses.

• The U.K. has signed a flurry of trade deals with India, the U .S., and the EU. On
aggregate, the benefit to the UK economy will be small, although key sectors such
as automobiles, steel, and aluminum will be somewhat relieved.

• The U.K. and the EU have announced new sanctions on Russian individuals and
companies. The 17th round of EU sanctions is aimed at Russia's shadow fleet of
oil tankers and aligns with sanctions by the U.K. and the U.S.

• The European Council has approved the Security Action for Europe (SAFE)
instrument, which will create a EUR150bn fund that EU members can request
loans from for military spending. Some countries outside the EU will also be able

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 to access the fund; for example, if they have signed a Security and Defense
Partnership, such as the U.K.

• In May, the Bank of England cut interest rates for the fourth time since July 2024 ,
by a further 25bps. Since the meeting, data for April has been released and shows
a sharp increase in CPI inflation to 3.5%, from 2.6% in March.

Asia Pacific
• Tensions between the U.S. and the Chinese Mainland have resurfaced, spurred by
U.S. warnings on the use of Huawei chips, export curbs on chip design tools , and
the threat of visa cancellations for Chinese students.

• The U.S. has accused the Chinese Mainland of failing to uphold its commitment to
boost exports of rare earth materials – critical to industrial supply chains in the U.S.,
India, and Europe – agreed during prior negotiations.

• Lee Jae-Myung, the liberal party candidate, won South Korea’s June 2025 snap
presidential election. Ongoing corruption cases against him will likely be
suspended under presidential immunity until his single five -year term ends in 2030.

• The hike in U.S. tariffs on aluminum and steel from 25% to 50% is set to further
impact major Asian exporters such as Vietnam, South Korea, Japan, Taiwan Region ,
and Australia, intensifying trade headwinds for the region’s metals sector.

• Japanese government bond yields are approaching record highs, with 40 -year
yields rising nearly 70bps in 2025. The resulting surge in borrowing costs for a
heavily indebted Japan could force difficult policy trade -offs.

Eastern Europe and Central Asia

• In Romania, pro-EU candidate Nicusor Dan won the second round of the
presidential election held on May 18, defeating far-right challenger George Simion,
and was sworn in on May 26. Shortly after taking office, he announced a 'realistic'
budget deficit target of 7.5% of GDP for 2025, down from 9.3% in 2024.

• The 2025 ‘1+5’ Italy-Central Asia Summit was held on May 14, bringing together
Italy and the five Central Asian countries. This high-level meeting focused on
enhancing cooperation across political, economic, cultural , and academic spheres.

• In April, Russia’s oil export revenues dropped to a two -year low of USD13.2bn due
to falling global crude prices and weak demand. Despite mounting economic
pressures, Russia is amassing troops and equipment, signaling a potential major
offensive as Ukraine struggles with manpower shortages.

• The Central Bank of the Republic of Türkiye conducted record FX interventions,

totaling USD50bn, over four weeks in March and April 2025, marking the largest
such effort in the country's history. This intervention was aimed at stabili zing the
Turkish lira amid economic uncertainty and geopolitical pressures.

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Latin America
• We have downgraded Bolivia’s overall country risk rating by 25bps to DB6b due to
slowing growth, high inflation, large fiscal deficits, FX shortages, looming default
risk, and policy uncertainty before the August 2025 elections.

• We have downgraded Venezuela’s overall country risk outlook from ‘stable’ to

‘deteriorating’ as a result of contracting real GDP, surging inflation, a weakening
currency, and a tougher approach by the U.S. towards Venezuelan President
Nicolas Maduro’s administration.

• U.S. protectionism is a risk to export growth in Brazil, while easing commodity

prices are likely to weigh on export earnings. Rising public debt is a concern, and
limited political space to curb spending could trigger market volatility.

• Robust agricultural growth in Mexico helped offset declines in sectors such as

construction, mining, and electricity, and parts of the services sector. However,
underlying weakness and fragile momentum persist, with continued risk of a further
slowdown in growth due to uncertainty in U.S. trade policy.

• It is anticipated that Costa Rica's shift to a flexible exchange rate regime will
strengthen the effectiveness of monetary policy on economic activity and inflation.
The economy is further supported by increased foreign investment and improved
market access.

Middle East and North Africa

• Ceasefire agreements between Israel and Hamas have effectively broken down, as
Israel continues airstrikes in Gaza and Yemen, with no clear prospects for de -
escalation.

• Oil prices are expected to continue the downward trend ; OPEC+ announced that
it would increase production by 411,000 barrels per day in July 2025, following
similar hikes in May and June, to put pressure on overproducing members.

• U.S. President Donald Trump's May 2025 Middle East tour prioriti zed economic
deals over traditional diplomacy, securing over USD600bn in investments and
defense agreements with Gulf nations.

• The U.S. recently submitted a formal proposal to Iran outlining elements of a

potential nuclear agreement, amid reports of an increase in Tehran’s stockpile of
near-weapons-grade uranium over the past quarter.

• Growth prospects for Syria have improved after the U.S. pledged to lift sanctions
following talks with President Ahmed al-Sharaa, easing Caesar Act pressure on
third parties – a move likely to reopen trade and reconstruction channels.

The Nordics
• In Q1 2025, Denmark’s economy contracted 0.5%, reversing the 1.6% growth seen
in Q4 2024, according to preliminary data from Statistics Denmark. The downturn
was largely driven by a 17.3% drop in the pharmaceutical industry’s gross value

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 added, while the overall economy – excluding pharma – expanded 1.0%. Despite
the quarterly decline, y/y growth stood at 3.6%, reflecting broader economic
resilience.

• Sweden faced comparable economic challenges, with Q1 2025 GDP growth at -

0.2% q/q and +0.9% y/y. The decline was primarily driven by a 3.8% drop in fixed
investment, particularly in the construction sector.

• On May 26, German Chancellor Friedrich Merz met with Nordic leaders in Turku,
Finland, to discuss regional security, economic cooperation , and NATO’s role in
the Baltic Sea region.

• On April 24, Finland announced a EUR2.0bn tax reform as part of its 2025 mid -term
budget, cutting earned income and corporate tax. The corporate tax rate will drop
from 20.0% to 18.0% in 2027 to attract investment and spur growth. Income tax cuts
will mainly benefit low- and middle-income earners, with the top marginal rate
reduced from 56.0% to 52.0%. The government expects economic stimulus despite
concerns over the deficit.

• On April 8, the European Free Trade Association (EFTA) countries of Switzerland,

Iceland, Liechtenstein, and Norway signed a modernized free trade agreement with
Ukraine. The new agreement aims to support Ukraine's resilience, recovery , and
economic growth, and to strengthen ties between the EFTA countries and Ukraine
across various sectors.

Sub-Saharan Africa
• The European Bank of Reconstruction and Development (EBRD) and the EU will
continue to invest in countries such as Nigeria, Kenya, Benin, Cote d'Ivoire, Ghana ,
and Senegal, focusing on agribusiness, infrastructure, small businesses , and critical
raw materials.

• Nigeria has launched an air trade corridor under the African Continental Free Trade
Area (AfCFTA) to improve access to markets such as Kenya, Uganda , and South
Africa. Nigeria projects that the air corridor will reduce transport costs by 50 -75%.

• The Democratic Republic of the Congo (DRC) has offered the U .S. access to the
Rubaya mines, as well as other mines, in exchange for U .S. support in fighting the
M23 rebels who currently control major coltan mines in the DRC.

• Nigeria, Senegal, Burkina Faso, Mali, and Gabon have public debt to GDP ratios
higher than 50%; this could lead to higher inflation and lower investor confidence
and could result in further monetary tightening.

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 Movement in Risk Dimensions

Source: Dun & Bradstreet

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