Barclays has updated its economic forecast, predicting 0.5% U.S. GDP growth in 2025 post trade agreements with China. The eurozone outlook was also revised to flat growth this year. Despite these positive changes, Barclays remains cautious about the eurozone’s uncertain future due to ongoing tariff negotiations.
In a significant update, Barclays has decided to revise its economic outlook for the United States, now predicting a small growth instead of a recession. The bank indicated it expects the U.S. GDP to grow by 0.5% in 2025, a shift from an earlier forecast that anticipated a contraction of 0.3%. This adjustment comes in light of reduced trade tensions between the United States and China, which Barclays considers a positive economic influence.
The announcement was made in a research note released late Thursday, marking a noteworthy change in sentiment regarding the U.S. economy. For 2026, Barclays has updated its forecast to a growth of 1.6%, a slight increase from the previous projection of 1.5%. This outlook reflects a broader sense of improved stability in the economic environment.
In addition to the U.S. forecast, Barclays has also made adjustments to its projections for the eurozone. The bank now expects flat growth for this year, an improvement from its earlier prediction of a 0.2% contraction. However, despite this optimism, Barclays remains cautious regarding the eurozone’s long-term growth prospects, citing ongoing uncertainties in negotiations regarding tariffs between the European Union and the United States.
The recent developments stem from a trade agreement reached between the United States and China, which has seen tariff rates decrease significantly. According to a joint statement released this past Monday, China will reduce tariffs on U.S. goods from an astonishing 125% to 10% for a span of 90 days. Conversely, the United States has agreed to cut tariffs on Chinese goods from 145% to 30%. This two-step reduction is aimed at mitigating the trade dispute that had escalated sharply earlier in the year.
These tariff changes officially took effect on Wednesday, following a 90-day truce negotiated during talks held in Geneva over the weekend. Despite this positive development, Barclays expresses caution regarding the eurozone’s future economic health. They commented, “Overall, we remain cautious about the eurozone’s growth prospects. Uncertainty remains high… with no signs of meaningful progress on tariff negotiations.”
Barclays has notably revised its economic outlook for the U.S., moving from recession predictions to an expected growth of 0.5% by 2025, attributed to easing trade tensions with China. While the eurozone forecast has also improved slightly, uncertainty remains, highlighting ongoing concerns for the region’s economic future. The recent tariff reductions between the U.S. and China signal a potential shift in trade relations that could stabilize the economic landscape further ahead.
Original Source: www.fxleaders.com
