2025 Global Markets Outlook: 10 Points on Growth, Tariffs, and Fiscal Risks

Global Markets Outlook 2025: Navigating Growth, Tariffs, and Fiscal Risks

• Goldman Sachs Research strategists provide detailed insight on their global markets outlook, highlighting 10 core investment themes that are essential for understanding the current economic environment.
• These themes encompass various sectors and geographic regions, offering a comprehensive perspective on emerging trends, potential challenges, and opportunities that investors should consider for informed decision-making.
• From technological advancements to sustainability efforts, each theme is designed to guide investors in navigating the complexities of the market landscape effectively.

1. Wider Distribution After Soft Landing: The base case predicts solid US growth, higher equities, and a stronger Dollar, but with a wider range of possible outcomes due to policy shifts and market movements.
2. Tariff Impact: Expected tariffs on China are manageable, but broader tariffs could be more inflationary and disruptive, potentially leading to a trade war.
3. Fiscal Risks and Terminal Rates: Post-election fiscal expansion in the US and other countries could lead to higher terminal rates globally.
4. Dollar Strength: US growth is expected to outpace other developed markets, reinforcing Dollar strength.
5. China’s Response: China’s economic outlook depends heavily on domestic policy, with tariffs having a smaller impact than in previous years.
6. Challenges for Europe and Emerging Markets: European growth faces headwinds from US policies, while emerging markets deal with higher rates and a stronger Dollar.
7. Energy Markets: Oil prices are expected to remain range-bound, with risks from geopolitical events and trade policies.
8. Inflation and Growth Risks: Central banks are focusing on growth risks as inflation declines, but trade and fiscal policies could impact inflation.
9. Valuation Challenges: High US equity valuations pose long-term risks, especially if growth slows.
10. Diversification and Hedges: Investors are advised to diversify and hedge against potential risks, with a focus on US assets and options for protection.

Trading Tails and Tailwinds

See the full pdf version of Goldman Sach’s report, Markets Outlook 2025: Trading Tails and Tailwinds.

• Tails: This refers to the “tail risks” or the less likely but potentially impactful events that could disrupt markets. These include broader tariffs, geopolitical tensions, and unexpected economic shifts.
• Tailwinds: These are the positive factors that could drive market growth, such as solid US growth, higher equities, and a stronger Dollar.

The subtitle encapsulates the idea that while there are significant risks (tails) to consider, there are also positive forces (tailwinds) that could propel the markets forward. This dual perspective is crucial for investors to navigate the complexities of the global market landscape in 2025.