Investing.com -- Bank of America analysts predict that 2025 will bring "unbalanced growth," with the U.S. outperforming while China and the Euro Area face challenges.
Global growth is expected to stabilize between 3.2% and 3.3% through 2026, said BofA.
They explained that U.S. economic momentum prompted an upgrade to growth forecasts, while the Euro Area was downgraded, and China is expected to grow below official targets.
"Trumponomics 2.0," emphasizing trade, immigration, fiscal policy, and deregulation, introduces significant uncertainty, according to the bank.
However, they state: "The policy mix we expect is better for the US than the rest of the world but ironically will widen the US current account deficit."
BofA notes that emerging markets face varied impacts; Mexico and India may gain from supply chain shifts, while lower oil prices could benefit oil-importing nations but challenge exporters.
Globally, inflation stabilization remains uneven, with the Federal Reserve and ECB likely cutting rates to 4% and 1.5%, respectively.
"Excessive fiscal profligacy in the U.S., coupled with protectionist policies and financial repression, could lead to higher inflation and severe global instability," adds the bank.
Analysts flagged risks from aggressive tariffs, trade wars, or excessive U.S. fiscal spending, which could lead to inflationary pressures or a global slowdown.
BofA expects China to counteract potential tariff shocks with fiscal easing, while OPEC+ discipline and uncertain oil production from Iran and Saudi Arabia could impact energy markets.
For the U.S., BofA believes improved productivity should drive higher growth and inflation than consensus forecasts, bolstering domestic performance but straining global trade dynamics.
While risks loom, analysts also see opportunities, saying that pro-growth U.S. policies could lift global growth, though protectionism remains a threat.