Credit rating agency Moody’s has sharply downgraded its global economic growth forecasts for 2025 and 2026, revising them to 1.9% and 2.3% respectively, down from the 2.5% predicted last February. This significant drop is mainly attributed to rising tariffs on key industrial goods such as steel and aluminum—a trend that is hindering international trade and weighing on global investment.
According to Moody’s, these new trade barriers will have a particularly harsh impact on the US economy, which is expected to contract by an additional 1% due to these protectionist policies. Inflation in the US is projected to rise to 3%, clearly overshooting the Federal Reserve’s 2% target. As a result, US economic growth is only expected to reach 1.5% in 2026.
The economic outlook is also deteriorating for several major G20 economies. Among the hardest hit are Germany, France, Italy, the United Kingdom, Canada, Australia, South Korea, Japan, India, Mexico, Indonesia, and South Africa. Moody’s projects sluggish performance for these countries amid a global climate that has become increasingly uncertain and less conducive to growth.
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