The global macroeconomic outlook for 2025 will undoubtedly be influenced by the changes in economic and geopolitical policies occurring in the United States under the new administration of Donald Trump.
This is part of the observations from the “Venezuela Situation Report. April 2025,” prepared by the Institute of Economic and Social Research (IIES) of the Andrés Bello Catholic University (UCAB), which has already been summarized by Venezuela Política in a previous issue.
The report anticipates a greater fragmentation of the global market, upward pressure on inflation, and a slowdown in global economic growth, all of which will negatively impact international trade, investments, and consumption.
Regarding the Latin American and Caribbean region, the report forecasts slow growth overall, with recovery expectations for Argentina and challenges for Mexico and Brazil.
Impact of U.S. Policy
The UCAB report highlights the effects of the changes in economic and geopolitical policies during Donald Trump’s second term, characterized by an “increase in tariff rates” and “non-tariff restrictions,” which analysts believe will create “very adverse effects on trade flows, resulting in new disruptions in supply chains.”
Trump’s measures and the “inevitable retaliatory reactions from affected trading partners” are expected to negatively affect global investment and consumption expectations.
The expectation is for a greater and increasing fragmentation of the global economy in the long term, driven by domestic policy decisions and geopolitical rivalries. The impact will not only affect trade but will also lead to a “reduction in workforce mobility and technology transfer.”
IMF and World Bank projections for January 2025 place global growth at around 3%, similar to the last three years and below pre-pandemic levels. Developing economies, especially in Asia, are expected to continue growing faster (4.7%) than developed economies (1.8%).
Key Economies
According to estimates from the IMF and WB, let’s look at expectations regarding the world’s key economies.
United States
Analysts estimate—though they are unclear about the magnitude and timing of policy changes—that the net short-term effects of Donald Trump’s administration’s policies—trade, immigration, fiscal—will negatively impact previous prospects, except for internal prices.
A growth rate similar to that of 2024 is expected, specifically 2.7%, which will fundamentally depend on domestic consumption, whose confidence seems to show “weakness due to strengthening inflationary expectations and uncertainty.”
China
The report projects further weakening of growth, below 5%. Negative factors include a “reduced dynamism in domestic consumption and the ongoing, not yet fully resolved, real estate crisis.”
Fiscal and monetary stimulus policies have uncertain effects on domestic demand, and deflationary trends are expect to continue. While U.S. tariffs may affect its exports, the impact is believed to be less than on Mexico and Canada, given its international diversification.
India
India is believed to continue being the fastest growing economy among the largest. However, a slowdown is anticipated in 2025 due to the “unexpected weak dynamics shown by the latest industrial sector indicators.”
Euro Zone
The European Central Bank (ECB) revised downwards the expected growth rate for 2025 to 0.9%. They estimate that Germany and France will face challenges in manufacturing and exports. While internal consumption may strengthen, an increase in defense spending could result in inflationary pressures and halt interest rate reductions.
Japan
A slight growth increase of 1% is expected compared to 2024, where it was 0.3%, driven by higher investment and improvement in consumption due to wages.
The Outlook in Latin America and the Caribbean
The UCAB report indicates that in 2025, Latin America and the Caribbean will experience a low growth rate, particularly in Mexico and Brazil.
Argentina
Argentina could see the largest expansion, specifically 5%, driven by a rebound effect and the “radical changes in market-friendly economic policies” implemented by President Javier Miley’s administration.
Mexico
In contrast, Mexico is expected to have the worst performance among major regional economies—estimated at 1.4%—with risks of it being even lower depending on the extent of U.S. tariff impacts.
Brazil
Brazil’s growth is also expected to decline to 2.2%, the lowest in five years, due to the lagging effects of restrictive monetary policy and high inflation.
Other Economies
Most economies in the region will grow at moderate rates between 2.4% and 2.6%.
Growth in Latin America and the Caribbean could potentially be negatively impacted by U.S. trade policy, reduced growth in China, and worsening climatic conditions. Colombia faces political instability and fiscal concerns. Chile and Peru are vulnerable to reduced mineral demand and a Chinese slowdown.