Global growth weakest since financial crisis: S&P

“In both years, projected global growth would be the weakest since the global financial crisis of 2008–09, excluding the COVID-19 pandemic,” it said — adding, “Risks are to the downside.”

Prior to the U.S. election, the firm was calling for 3% global growth. However, the impact of the disruption in global trade, the sharply negative equity market reaction, and the accompanying turmoil in the global bond markets, have pushed forecasts down.   

Alongside the gloomier global forecasts, S&P also cut its forecasts for U.S. real GDP growth in 2025 and 2026, by 0.6 percentage points and 0.4 points, respectively, to 1.3% and 1.5%. 

“While a technical recession in the U.S. is not our base case, it was looking like an increasingly close call prior to the pause on reciprocal tariffs,” it said. 

For Canada, S&P continues to forecast a recession in mid-2025. 

Forecasts are also weaker for China and India, while “Europe’s near-stagnation is also forecast to continue in the near term, although fiscal policy should support eurozone growth from 2026, contributing to a modest global pickup.”

Alongside the weaker growth forecasts, S&P also revised its inflation forecasts higher, again due to the impact of U.S. trade policy.

Monthly core inflation has been picking up this year. “Further increases are likely as the impact of rising tariffs becomes more widespread,” it said. 

Against this backdrop, S&P said it expects just one 25-basis-point rate cut from the U.S. Federal Reserve Board this year. “A series of cuts are still forecast in 2026 as inflation worries recede,” it said. 

“While the acute near-term risk of a negative feedback loop between market turmoil and recession has diminished, the chronic problems of U.S. policy volatility, related uncertainties and adverse economic spillovers are likely to linger,” it said.