Five optimistic scenarios for the global economy

Sunday happy. Thank you very much for your responses to the recent newsletter, which has become viral in Canada. I have gone online online on Ben Mulrneyy radio program (Link here).

Now until this week. The customs tariff, uncertainty and slow American economy leads to reducing the annual growth forecast for 2025 and 2026 for the global economy. This is barely surprising. Most of them did not expect Donald Trump to return to the White House that this would be troubled from the beginning.

Looking at depression, I went to find pockets of optimism. So, here are five scenarios that may mean that global economic predictions are surprising on the upper side in the short term.

Screen 1: Trump relieves his introductory plans

The last diving in the S& P 500 index was not enough to deter the American president from his agenda to increase the customs tariff. However, as the Biden administration has shown, stock market reviews and their approval do not always move together. The latter tends to track consumer confidence (especially for Republicans when Trump is in power), which recently decreased with high inflation expectations.

Since the effects of import duties come to families, confidence and approval may decrease more. With the Americans still reeling from a 20 percent post -birth leap at the price level, the threshold of more pain is limited. This can cause pressure from the White House or the Republican Party to request things. The middle of the period will appear 2026 quickly.

Most analysts believe this is unlikely. But Trump has a talent to reduce customs tariffs and the final dates to mitigate. Even a slight decline-including the slope, or the most organized approach to commercial policy or delaying it in the “mutual” tariff on April 2-would improve global growth expectations in relation to the extent of destroying its perfection agenda in general.

Screen 2: European growth surprises

Most predictors expect Germany’s plans to high investment spending – and appetite for higher defense expenses throughout Europe – to enhance the growth of the eurozone. But there are three other possible sections to consider.

First, a number of positive developments are close to the European Union. The highest government spending, the height of local stock markets, and the “gathering around science” the effect of the reaction to the Trump tariff and NATO threats will enhance consumer and business confidence. This can generate a real economic impact higher than expected.

For example, with the continued household savings ratios of approximately 3 degrees Celsius higher than prenatal, there is a large area for less cautious consumers to increase the growth of the euro area. For companies, high stock assessments and capital flows can pay more by line investment decisions. Policy reform may also be more coming.

Second, how the continent explains that its security spending needs issues. Goldman Sachs estimate that building equipment in Europe and matching the annual investment of Russia in new supplies may require at least 160 billion euros annually (about 0.8 % of GDP). How spending depends on growth in the near term on its size, speed and nature, which once again leaves a room for bullish lack. (For example, spending on research and development in defense can have positive effects on other industries.)

However, Andrew Kiningham, the chief economist in Europe in Capital Eightingx, is more skeptical. He said: “A few countries that are identical to the increase in Germany will match the deficit, and the defense complications are likely to be low as many money will be used for equipment instead of current spending, and some will be imported.”

Third, the ceasefire in Ukraine may lead to low gas prices, increase morale in the markets and increase confidence-which enhances the gross domestic product in the euro area by up to 0.5 percent, according to Goldman.

Screen 3: China picks up global recession

Likewise, the aspects of China – the largest source and factory in the world – will enhance global expectations. how?

First, it can enhance high private sector confidence in the private sector and investment activity above expectations. Both the positives of President Xi Jinping for the efforts of President Xi Jinping, are all positives to rebuild relations with entrepreneurship in China after obtaining private wealth and technology, are all positives to rebuild relations with business fennel in China after considering stimulus measures in Beijing and President Xi Jinping, Deepseek offers Deepseek, Deepseek offers Deepseek, provides Deepseek, provides Deepseek, provides Deepseek, The shock is made in typical development, the stimulus measures in Beijing, and the efforts of President Xi Jinping to rebuild relations with entrepreneurship in China, after obtaining special wealth and technology. International investors are also encouraged; The flows increased to the stocks exposed to China.

Second, Amnesty International can enhance China’s growth. The low -cost Deepseek language model and open sources have caused optimism that technology may be adopted faster. It will stimulate the highest investment in data centers. Productivity gains may also come faster. Recently, companies that extend to the auto industry have announced plans to use Deepseek technology.

Third, Beijing’s economic support may be surprised. At the National People’s Conference for this month, the government adhered to the purpose of a financial deficit of 4 percent of GDP – the highest in three decades. Although analysts were hoping to get more evidence of families’ support, the Communist Party has become more hiding about the need to support demand.

“There is a major difference in political messages for this year compared to previous years is Beijing’s focus on maintaining flexibility and the ability to adapt to policy making,” said Jing Sima, a strategic expert in China at BCA Research. “This indicates that the central government is still open to provide additional economic support if necessary.”

For both European and Chinese exporters, success from American definitions will also depend on the ease of converting American importers into local suppliers. This may be more difficult for some sectors, especially amid economic uncertainty in the United States.

Screen 4: American growth surprises

Even if Trump is following the definitions, other local economic developments can weaken its impact.

First, the tax cuts and the abolition of restrictions in the rear pocket of the White House remain. The extension of the provisions mentioned in the Trump tax cuts law and its functions (most of which end at the end of 2025) will support consumption and investment on the margin. Tax Corporation Estimates This will increase the long -term economic product by 1.1 percent.

A plan to reduce corporate tax will be based on. Fears about the height of borrowing – which can pay higher returns – risk eating in any fluctuations. (The expansion of the TCJA range alone without compensation would raise the deficit by 4.6 Triton), but if the Trump market allows the age of some of its tax plans, which may reduce the growth caused by definitions. Another batch of efforts to reduce the red tape, especially to the stressful planning requirements, will come.

Second, it adopts the fastest artificial intelligence in the world of possibility. Matthew Martin, chief American economist at Oxford, suggests that a range of low interest rates and tax frustration next year may hurry to invest in artificial intelligence. Although the use of artificial intelligence in all American works is still taming, spreading is rarely a written process. New technology breakthroughs and applications are likely to accelerate their effect on productivity.

Screen 5: Low interest rates

Finally, the prices of the central bank’s policy may decrease faster and further than the consensus expects, support for consumption and commercial activity.

Currently, inflation in advanced economies is driven by local factors – especially inflation in services, which is supported by wage growth. But tight labor market indicators such as employment intentions and vacancies reduce. This means that salary prices may decrease faster than expected, allowing central bankers to make additional discounts.

The possibility of imported inflation (as a result of tariff wars) is to increase inflation expectations and increase fears that high rates can remain strength. China can be a compensation factor here. SIMA at BCA Research indicates that, in the last trade war, Beijing has fill out tax subsidies to expand its exporters. This, in addition to the possible conversion of Chinese exports associated with the United States to other places, can help compensate for the inflationary effect of revenge definitions on America.

Are these scenarios very optimistic? maybe. Each of them is supported by assumptions, from blind points about politics’s developments to economic effects that are difficult to swing the mood of the family, business and investor.

However, measuring how to change economic paths is a valuable exercise itself, given that many of the prevailing market accounts have done 180 in recent months (see: The exceptional United Statesand China is “non -investment” and Non -favoring Europe shares).

However, the huge scope and influence of the American economy and its capital markets means that for global growth expectations, it is particularly surprised in the upward trend (instead of simply worse than what was currently expected), the White House will need to change its economic agenda. This is not impossible. But I will leave the accurate difficulties of Trump and Maga scientists.

Send me scenarios and ideas in the budget direction in [email protected] Or on x @Teapperikh90.

Food to think

After a series of modern breakthroughs in the automatic enhanced by artificial intelligence, the University of Edinburgh revealed the first robot of artificial intelligence in the world. the Associated search paper It emphasizes economic opportunities that can come with more intelligent robot technology, behind coffee cups.