Barclays Upgrades U.S. Growth Predictions Following Trump-China…

Barclays revises U.S. GDP growth forecast to 0.5% in 2025, up from contraction, due to improved trade relations with China. Eurozone outlook adjusts to flat growth, with noted caution over ongoing uncertainties. The trade agreement includes significant tariff reductions, yet challenges remain for continued growth.

Barclays has announced a significant revision to its economic outlook for the United States, now predicting a 0.5% growth in GDP for 2025, reversing its earlier forecast of a contraction. The bank attributes this positive change to enhanced trade relations between the U.S. and China following a recently negotiated agreement that eased trade tensions. Moreover, Barclays has also adjusted its eurozone projections to flat growth for the year, improving from a previously predicted slight contraction.

The bank’s revised expectations were included in a research note released late Thursday. For 2026, Barclays nudged up its growth forecast from 1.5% to 1.6%. Despite offering this more optimistic outlook for the U.S., Barclays has advised caution regarding eurozone growth. Factors such as ongoing uncertainty and unresolved tariff negotiations between the EU and U.S. contribute to this cautious stance.

The newly forged trade agreement entails significant tariff reductions agreed upon by the U.S. and China, which went into effect Wednesday. Typically, such negotiations are complex, and previous trade disputes had heightened tensions earlier this year. Under this agreement, China has reduced tariffs on U.S. products from 125% to 10% for the next 90 days, while the U.S. will reciprocally lower its tariffs on Chinese items from 145% to 30%. This cooperation aims to mitigate the trade war that has driven volatility in both economies.

Barclays maintains a cautious perspective on the eurozone, even with improvements. The bank predicts a technical recession in the region during the second half of 2025, but notes that the contraction may be less severe than initially expected. The statement from Barclays emphasizes the high level of uncertainty that still surrounds eurozone growth.

In light of these updates, stakeholders are urged to monitor ongoing negotiations, as their outcomes could influence both U.S. and European markets moving forward. The bank’s cautious optimism indicates that while signs of recovery are emerging, significant risks are still present.

In summary, Barclays has upgraded its U.S. economic forecast, citing reduced trade tensions with China, and predicts GDP growth of 0.5% for 2025. In contrast, the bank remains wary of the eurozone, projecting flat growth amid uncertainties and technical recession concerns in 2025. The recent trade agreement between the U.S. and China, involving considerable tariff reductions, has played a crucial role in improving these forecasts. Nevertheless, ongoing negotiations will be pivotal factors to watch in the coming months.

Original Source: www.fxleaders.com