Global Growth Recovery Reflects Major Economies' Resilience: QNB

Doha: QNB affirmed that the recovery in global growth forecasts for 2025 does not indicate a lack of risks as much as it reflects the ability of major economies to adapt to shocks in a world characterized by rapid change and rising uncertainty.

It highlighted that forecasts were no longer on a fixed linear path, but rather the result of a delicate balance between shocks and resilience, and between risks and opportunities.

In its weekly report, the bank said that end-of-year forecasts for China and the Euro area are better than they were at the beginning of the year, while expectations for the United States declined only slightly, resulting in global economic growth of 3 percent.

The report noted that the beginning of 2025 was marked by cautious optimism, as global economic forecasts experienced sharp fluctuations reflecting the level of uncertainty that has come to dominate the global economic and political landscape. At the start of the year, estimates pointed to steady global economic growth of around 3 percent, supported by easing inflation, continued monetary policy easing, the resilience of the US economy, and an expected cyclical recovery in both the euro area and China.

The report noted that these expectations were soon put to a severe test as US economic policy orientations shifted. Market sentiment began to decline in February, before concerns intensified on Apr. 2, when the new US administration announced unprecedented tariffs on imports, later known as Liberation Day. This sudden shift brought trade war fears back to the forefront and reopened discussions about the likelihood of a global recession.

QNB added that, as a result, global economic growth forecasts fell to 2.6 percent, about 0.4 percentage points below initial estimates, marking one of the fastest downward revisions in a short period of time.

However, this gloomy picture did not last long, as prospects gradually improved once it became clear that the repercussions of trade shocks were less severe than initially feared.

The report examined in depth the factors that contributed to the recovery of growth forecasts during 2025 for the three major economies (the United States, China, and the euro area), which together account for nearly 60 percent of the global economy.

It said that the US economy demonstrated notable resilience, supported by strong private consumption and continued investment. The labor market remained solid, with the unemployment rate close to full employment levels and real wage growth exceeding inflation.

Rising stock markets also boosted household net wealth, supporting spending capacity. At the same time, companies continued to expand investment, particularly in technology and artificial intelligence sectors, supported by favorable financial and monetary conditions. As a result, forecasts for US economic growth improved to around 1.9 percent in 2025.

In the euro area, the recovery was driven by easing inflationary pressures, which allowed the European Central Bank to significantly cut interest rates and move monetary policy out of its restrictive stance. Growth in real wages and continued labor market resilience supported consumption, alongside the role of European Union programs in stimulating investment.

In this context, the report highlighted that despite challenges related to energy, geopolitics, and global competition, end-of-year expectations now point to better performance than had been anticipated at the beginning of 2025.

As for China, structural transformation played a pivotal role in improving forecasts. More supportive policies for the private sector, along with growing optimism about the country's capabilities in advanced technologies and artificial intelligence, helped boost confidence.

The report confirmed that the Chinese economy continued its transition away from reliance on traditional industries toward higher value-added products, strengthening its position in global supply chains. Despite ongoing trade tensions, estimates improved to indicate growth approaching 5 percent during the year.

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