1、A member of MUFG,a global financial groupGlobal Economic OutlookQ1 2025MUFG Bank Economic Research OfficeMarch 11,2025(Original Japanese version released February 28,2025)Global summary2MUFG Bank Economic Research Office|Global Macro OutlookTrumps second term as US president has started with a sudde

2、n shift in trade policy and the weakening of thetransatlantic alliance.Global geopolitical risks have risen sharply and are set to remain elevated.Lookingthrough the noise,however,we continue to highlight that macro fundamentals remain relatively firm.From aglobal perspective,the post-pandemic norma

3、lization of interest rates,inflation and growth is broadlycontinuing.Lower borrowing costs and recovering real income are likely to offset the drag from tradeuncertainty and support growth in many developed economies,while bolstered fiscal policy measures couldprovide further impetus.We have left ou

4、r overall global growth forecast unchanged.From a US perspective,new tariffs measures will push up inflation rates and wider policy uncertainty is likelyto drag on confidence.However,the economy has carried firm momentum into 2025,supported by resilientconsumer spending.Our baseline is that growth w

5、ill slow,but not collapse,this year.The effect of pastmonetary easing is still passing through to the economy and we still see scope for further rate cuts this yearand next.European policymakers have been jolted into action.We had assumed that there would be some fiscal easingin Germany after last m

6、onths election but the measures being discussed have far surpassed all expectations.Alongside wider European efforts to increase defense spending,there are now significant upside risks to ourforecasts for Germany and the euro area as a whole.There may also be a boost to sentiment from any peacesettl