1、A member of MUFG,a global financial groupSeptember 11,2025(Original Japanese version released August 29,2025)Global Economic OutlookQ3 2025Global summary2The central theme of the last quarter has been resilience.The global economyhas so far weathered the shift in US tariffsrelativelywell,despite the

2、 direct impact on export demand and broader challenges stemming from uncertainty and policy volatility.While valid questionsremain about the future direction of US trade policy,a more stable equilibrium appears to have emerged following the 2 AprilLiberation Day shift and the subsequent fallout and

3、negotiations.Our current outlook assumes that the broad contours of US tradepolicy will remain unchanged over the projection horizon,given the clear risks to inflation and economic activity from any renewed escalation.Although a sharp slowdown has been avoided,tariffs are set to be a headwind.Annual

4、 growth is still set to slow in 2025 across manyeconomies,particularly those heavily reliant on exports to the US.The impact of tariffs may also take longer to materialise than initiallyassumed.However,policy support especially in the US and China is set to help mitigate the risk of a global recessi

5、on.Weanticipate a return to moderate growth next year in many economies,supported by policy measures and favorable household incomedynamics.In the US,we forecast growth of 1.7%in both 2025 and 2026,from2.8%in 2024.Fiscal and monetary support is expected to cushion theslowdown to some extent.Inflatio

6、n is likely to reaccelerate as firms ability to absorb higher import costs through margin compressiondiminishes.Despite this,we expect the Fed will undertake a gradual easing cycle,moving toward a more neutral policy stance amid aweakening labor market.Weanticipate two rate cuts in 2025,beginning in