On December 11th, Schroders Global Investments published a report stating that global economic growth is expected to remain between 2.5-3% in the coming years. Schroders Global Investment forecasts show that the "Trump trade" will bring greater excess returns in the next few months. However, with the new government taking office, the uncertainty in predicting the global economic outlook will be higher than before, indicating that investment markets may face volatility. Most major central banks are currently in a loose fiscal policy environment, and the relatively loose financial conditions suggest that the global business cycle will show more vitality from the second half of 2025. Trump will advance policies to promote economic growth Schroders Global Investments continue to believe that market expectations for the U.S. economy are overly pessimistic and believe that it will be the main driver of global growth. Consumer sentiment is optimistic, and with the labor market cooling rather than collapsing, household spending should continue to drive economic growth. Once President-elect Trump takes office in January, the policy outlook will be filled with great uncertainty, but we believe that policies to promote economic growth and relatively moderate supply-side measures will increase economic growth to around 2.5% in 2025 and further accelerate to 2.7% in 2026. Accelerated economic growth may result in higher inflation than our previous assumptions, and after the Federal Reserve takes some short-term fiscal stimulus measures, its focus may eventually turn to raising interest rates in 2026. Dire economic situation in Europe The Eurozone's economy is expected to improve in 2025-2026, but the situation remains challenging. Although consumers benefit from lower inflation, continued price pressures may limit the space for further interest rate cuts. Schroders Global Investments believe that the terminal rate of the European Central Bank will be 2.5%, higher than market expectations. The main challenge facing the region continues to be the decline in manufacturing competitiveness, mainly due to high energy prices and weak productivity. Although industrial production is recovering in some countries, productivity in the entire Eurozone remains well below pre-pandemic levels. While energy prices have fallen from highs, EU companies still pay two to three times higher electricity bills than in the United States. Meanwhile, wage growth is accelerating, along with declining productivity, pushing up unit labor costs and lowering profit margins. Emerging Markets: Global policy uncertainty leading to slowing growth Schroders Global Investments have lowered their GDP growth forecast for emerging markets in 2025 from 3.9% to 3.7%, and expect it to only slightly increase to 3.8% in 2026. If strong economic growth under the Trump administration can drive up export demand, boost commodity prices, and promote investment in manufacturing supply chains, some emerging market economies may eventually benefit. However, this may be a bumpy process, as uncertainty in global policy outlook, a strong dollar, capital outflows, and high local real interest rates in various countries may impede economic growth in the short term. In major emerging markets, lower interest rates should eventually improve the economic outlook in India, but this largely depends on fluctuations in food prices. The sharp increase in food prices pushed the overall inflation rate above 6% in October, compared to 3.7% in August. Assuming food inflation will decline, and the Reserve Bank of India will cut interest rates in mid-2025.