QNB says end-of-year growth recovery shows the resilience of major economies

Qatar National Bank (QNB), in its weekly report, stated that higher growth forecasts for major economies worldwide at the end of the year compared to the beginning of 2025 are not because global risks have abated, but because these economies have the ability to adapt to the shocks of rapid changes and rising uncertainties.

QNB said that “forecasts were no longer on a fixed linear path, but rather the result of a delicate balance between shocks and resilience, and between risks and opportunities”.

End-of-year forecasts for China and the Euro area are better than they were at the beginning of the year, said QNB, while expectations for the United States declined only slightly, resulting in global economic growth of 3 per cent.

While there was cautious optimism at the beginning of the year, as estimates pointed to steady global economic growth supported by easing inflation, continued monetary policy easing, the resilience of the US economy, and an expected cyclical recovery in both the Euro area and China, things soon took a turn for the worse.

These expectations were “put to a severe test as US economic policy orientations shifted”, the report added. Market sentiment began to decline in February, before concerns intensified on April 2, when the new US administration announced unprecedented tariffs on imports. This sudden shift brought trade war fears back to the forefront and reopened discussions about the likelihood of a global recession.

Global economic growth forecasts fell to 2.6 per cent at that stage, QNB said, marking one of the fastest downward revisions in a short period of time.

However, this gloomy picture did not last long, as prospects gradually improved once it became clear that the repercussions of trade shocks were less severe than initially feared.

Major economies drive global growth recovery

The report examined the factors that contributed to the recovery of growth forecasts for the three major economies (the United States, China, and the Euro area), which together account for nearly 60 per cent of the global economy.

The US economy “demonstrated notable resilience, supported by strong private consumption and continued investment”. The labour market remained solid, with the unemployment rate close to full employment levels and real wage growth exceeding inflation. This was boosted by the rising stock markets, which increased net wealth and improved spending capacity.

With favourable financial and monetary conditions, forecasts for US economic growth improved to around 1.9 per cent in 2025.

In the Euro area, the recovery was driven by easing inflationary pressures, which allowed the European Central Bank to significantly cut interest rates and move monetary policy out of its restrictive stance. Growth in real wages and continued labour market resilience supported consumption, alongside the role of European Union programs in stimulating investment.

As for China, structural transformation played a big role in improving forecasts. More supportive policies for the private sector, along with growing optimism about the country’s capabilities in advanced technologies and artificial intelligence, helped boost confidence.

The report added that the “Chinese economy continued its transition away from reliance on traditional industries toward higher value-added products, strengthening its position in global supply chains”. Despite ongoing trade tensions, estimates improved to indicate 5 per cent growth for the year.