Macroeconomic environment

Economic growth started 2025 with relatively strong dynamics, largely maintaining the momentum seen in 2024, mainly in the United States and China, and to a lesser extent in the Eurozone. Economic activity at the beginning of the year was supported by buoyant labor markets, generally high government spending, less restrictive monetary conditions and lower inflation, although still above the 2% target, especially in the United States.

However, the policies of the new United States administration have been a negative shock for the world economy, which has raised the uncertainty and the financial volatility. Thus, BBVA Research anticipates a loss of dynamism in the main economies and inflation that could rebound, at least, in the United States. Likewise, possible fiscal stimulus measures could partially mitigate the impact of trade protectionism, particularly in the Eurozone, where plans have been announced to increase spending on defense and infrastructure, in a context of growing geopolitical challenges.

This context could lead the Federal Reserve to postpone until 2026 the interest rate cuts expected for this year (stable at 4.50% in recent months). In contrast, in the Eurozone, slower economic growth could allow the European Central Bank to cut rates further, to the 2.0% or slightly below that level, although this would also depend, among other factors, on the European Union's response to the United States tariffs, which could generate additional inflationary pressures.