1. Reading the inkblots: What the global economy reveals in Q4
Heading into the fourth quarter of 2025, the global economy looks like a Rorschach test: everyone sees something different in the same data. Bond bulls interpret slowing growth as a prelude to rate cuts, while equity investors view those cuts as further support for AI-fueled growth, brushing aside recession fears.
Admittedly, the old economy – industries rooted in the industrial era, reliant on physical goods and manual labour – has slowed in much of the world.
- China’s momentum has faltered: After a strong first half, export growth slowed sharply in Q3, and the housing market has not yet bottomed.
- US job growth has lost steam: Unemployment is edging higher after years of stability, though most other measures of economic activity are considerably stronger.
- Europe has been resilient but low-growth: Both soft and hard data point to weak growth in the second half, with manufacturing under pressure and fiscal stimulus yet to kick in.
But the investment binge in the race for AI, and the first signs of AI-driven productivity gains, are cushioning the blow. The resumption of Fed rate cuts and fading tariff uncertainty also help.
Our Research analysts expect the global economy to grow 3.1% this year, raising their estimate slightly from June. They forecast 2026 growth to be slightly lower.
