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    RESEARCH  |  3 POINT PERSPECTIVE  |  MACRO SHIFTS

    Q3 2025 Global Outlook: Turning the page

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    Contributors: Ajay Rajadhyaksha, Amrut Nashikkar & Themistoklis Fiotakis 
    26 Jun 2025

    Financial markets are moving on from trade and taxes and focusing anew on macro data and AI’s effect on earnings. Our Research analysts expect Western economies to slow this year but rebound in 2026.

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    CHAPTERS

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    1. The world is adjusting to a new tariff regime

    The effects of US tariffs will work their way through the global economy in the second half of 2025. The US should escape an outright recession, but our Research analysts see a big jump in goods prices coming, pushing core inflation in the US over 3%. That should keep the central bank on the sidelines until December.

    In China, there has been some good news on consumption and exports but the real-estate sector is yet to find a bottom. All told, our analysts see global growth dipping to 2.7% this year, down 20bp from the team’s last quarterly forecast in March.

    However, with the extremely high policy volatility of the past three months behind us, our analysts expect a rebound in growth across the West in 2026. The US tax bill will likely give some support to the US economy, Germany’s fiscal stimulus will start kicking in, monetary policy will be easier, and the trade war will be in the rear-view mirror.

    2. It isn’t all smooth sailing for the global macro community

    Bears can point to conflict between Russia-Ukraine and in the Middle East as reasons to worry. Another fly in the ointment is the idea that the world is losing confidence in assets denominated in the US dollar*. Our Research analysts note that there is now more of a risk premium in US assets, likely prompted by constant pivots on policy from the current administration.

    However, our analysts believe that narrative is now too stretched. The fundamental advantages of the US have not suddenly vanished. The country is an energy superpower and the pre-eminent technology superpower. It also controls global financial architecture and has the deepest and most liquid financial markets. They do not see a spiral in US bonds or the currency itself.

    3. Our analysts prefer equities over bonds at this point

    This preference is perhaps a little grudging, given the rally in global stock markets since the middle of April. But much of that move has been driven by the AI theme, which should remain a tailwind for stocks for several quarters to come.

    In 2023/24, all eyes were on the “compute” side of AI: which company had the most powerful chips or the fastest models. Now, investors’ focus has shifted to ‘inference’: how AI can cut costs and improve efficiencies across a growing number of industries. The results are starting to show up, as company after company has announced earnings that show AI adoption helping the bottom-line. Markets clearly feel, rightly, that the story has room to run.

    Asset allocation is about choices, and while equities were clearly much more attractive a couple of months ago, our Research team still expects them to do better than bonds as the year progresses.

    *Source: Barclays Research FX & EM Macro Strategy Quarterly Overview

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    About the experts

    Ajay Rajadhyaksha

    Ajay Rajadhyaksha

    Global Chairman of Research

    Ajay Rajadhyaksha is Global Chairman of Research at Barclays, based in New York. He drives the global macro research and strategy effort, including economics, rates, FX, commodities, emerging markets, and asset allocation. Since joining Barclays in 2005, Ajay has held various positions, including Head of Macro Research, Co-Head of FICC Research and, before that, Head of US Fixed Income Research and US and European Securitised Research.

    Amrut Nashikkar

    Amrut Nashikkar

    Managing Director, Fixed Income Strategy

    Amrut Nashikkar is a Managing Director in the Fixed Income Strategy team at Barclays based in New York, covering interest rate derivatives with a focus on interest rate volatility and the Libor transition. Amrut joined Barclays in 2008 from Lehman Brothers, where he was an interest rate strategist. Prior to that, he taught at New York University, where he graduated with a PhD in finance. He also holds a management degree from the Indian Institute of Management, Ahmedabad, and an undergraduate degree in engineering from the Indian Institute of Technology, Kharagpur.

    Themistoklis Fiotakis

    Themistoklis Fiotakis

    Global Head of FX & EM Macro Strategy

    Themistoklis (Themos) Fiotakis is the Global Head of FX and EM Macro Strategy at Barclays. In this capacity, he is responsible for FX forecasts and strategy views across DM and EM currencies as well as local EM rates. Before joining Barclays in 2022, Themos was the Head of Research at Glen Point Capital, a macro fund with an EM tilt. Prior to that, Themos ran FX and Rates research at UBS Investment Bank and before that he was responsible for EM FX Research at Goldman Sachs.

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