Leading economist offers a comprehensive macroeconomic analysis focusing on the U.S., Europe, and China.
Christophe Barraud, recognized multiple times as the world's top forecaster, recently provided an in-depth analysis of the macroeconomic landscape during a conference organized by the Monaco Economic Board.
His insights cover economic developments in the United States, Europe, and China, which he describes as "extremely turbulent and volatile."
China
Barraud reported that China's first quarter in 2025 showed promising economic performance, with an annual growth rate matching that of the previous quarter, standing at 5.4%.
The economist highlighted robust consumer activity, indicating that government stimuli aimed at boosting consumption, promoting tourism, and enhancing infrastructure have started to yield positive results.
This performance comes amid threats to exports due to ongoing tensions with the United States.
Notably, the real estate sector, which has been a significant economic drag for nearly five years, is beginning to show encouraging signs.
These factors lead Barraud to project an optimistic growth outlook for China, anticipating a growth rate of 5.4% for 2025. Additionally, a preliminary agreement between the two leading global powers is expected to mitigate the risks of a U.S. recession.
United States
In the United States, Barraud noted a contraction in gross domestic product (GDP) of 0.3% for the first quarter, a decline attributed to anticipated tariffs leading to "stratospheric imports." However, he pointed out that focusing on core growth components, which include consumption and investment, reveals a growth rate of 2.6%.
This figure reflects a relatively satisfactory performance amid significant uncertainties during the quarter.
Former President
Donald Trump is indicated to be willing to negotiate trade deals; nevertheless, announcements regarding new sector-specific tariffs are anticipated, maintaining a climate of volatility.
Amidst declining popularity, it is expected that Trump might ease his stand and consider tax reductions to bolster consumption, an area at risk from potential inflation resurgence.
Europe
Barraud identified two key factors contributing to Europe’s resilience despite uncertainty and tariffs.
Firstly, a significantly accommodative monetary policy, featuring lower interest rates, is facilitating private credit and, consequently, growth.
Secondly, substantial funding directed toward defense sectors is expected to support economic activity, with discussions suggesting a total of 800 billion euros allocated over the next four years.
Additionally, Germany has announced plans to stimulate fiscal investment in infrastructure, committing 500 billion euros over a twelve-year period.
The implications of these initiatives are significant, particularly for a nation with previously stringent debt practices.
While Barraud expressed caution about 2025, he projected that the European economic engine could rebound notably by 2026. His analysis regarding France includes concerns over rising debt levels, critiquing a tendency to increase taxes rather than reduce unnecessary expenses.