Global economies may benefit from positive US outlook

The United States provides a generally positive economic outlook for 2025 with consumer spending likely to remain strong and businesses generally optimistic about what they see as pro-business tax and regulatory policies from the incoming Trump administration.
The impact of US economic growth on the global economy is significant due to the country’s role as the largest economy in the world.
Top officials at the US central bank- Federal Reserve or Fed predicted that they will cut rates to 3.9% this year in their fresh economic estimates — suggesting that they will make just two rate cuts in 2026.
They had forecast four when they last released economic projections back in September, 2024. They then expect to make two rate cuts in 2026, and one in 2027.
Federal Reserve officials made their third and final rate cut of 2024 at their last meeting in December 2024. They also forecast two fewer rate reductions in 2025 than they had previously expected, as inflation lingers and the economy holds up.
In its recent economic commentary, Qatar’s QNB said: “We expect to see US inflation moderate further over the coming year, driven by normalised capacity utilisation, housing cost adjustments and the potential for fiscal consolidation under Trump 2.0 with Scott Bessent as the Treasury Secretary.”
“In our view, however, irrespective of all the concerns and potential shocks that US prices are vulnerable to, we believe that the US inflation outlook is constructive, i.e., is set to gradually return to target (2%) in the absence of any major geopolitical event or US policy rupture,” QNB noted.
The Fed cut its benchmark policy rate by a quarter of a percentage point at its meeting last month, and lowered it a full percentage point over its final three meetings of 2024.
But one key measure of inflation, the Personal Consumption Expenditures Price Index (excluding food and energy), was at 2.8% in November 2024 and has been stuck in the 2.6%-2.8% range since May last year.
Fed policymakers in December 2024 projected the benchmark rate would fall only another half of a percentage point this year, and investors largely expect the central bank to hold its policy rate in the current 4.25-4.50% range at its forthcoming (January 28-29) meeting.
The case for further reductions, according to Richmond Federal Reserve Bank president Thomas Barkin, would hinge on “real confidence that inflation has stably gotten down to the 2% target... The second would be a significant weakening on the demand side of the economy.”
“I think there is more upside risk than downside risk” to inflation, given the economy’s continued strength and the possibility of renewed wage and other price pressures, Barkin told the Maryland Bankers Association in Baltimore recently.
As the US economy grows, American consumers and businesses tend to import more goods and services. This boosts exports for trade partners, supporting their economic growth.
US growth often increases demand for commodities like oil, metals, and agricultural products, driving up global commodity prices and benefiting commodity-exporting countries.
Growth in the United States has seen stimulating production across global supply chains, benefitting countries that are integrated into the US manufacturing and services sectors.