GDP poised to slow, as geopolitical uncertainty and de-globalization trend forces executives to ‘pause’ and ‘prepare’

KPMG International is forecasting global GDP growth to slow to rates not seen since the global financial crisis of 2008/9 as geopolitical and economic uncertainty become core themes for CEOs.

The latest KPMG Global Economic Outlook predicts gross domestic product (GDP) internationally is poised to slow from 3.2 percent in 2024 to 2.7 percent in 2025 before regaining some ground to 2.8 percent in 2026.

Meanwhile global inflation is expected to cool from 4.5 percent in 2024 to 3.6 percent in 2025 and hit 3.1 percent in 2026.

The latest forecasts were outlined in KPMG International’s first ever Global Economic Outlook webinar, which was attended by almost 2000 executives across the world. The broadcast was designed to analyze and break down some of the challenges and opportunities ahead in such a complex period of time for the business community.

Current market and trading volatility was reflected in LIVE polling which was conducted during the global broadcast. Attendees were asked what their top concern was right now for their organization, with more than a third (34%) saying macroeconomic volatility was the biggest threat, while 30 percent described geopolitical instability as their top concern. Meanwhile, nearly half (47%) said their company’s growth prospects had worsened since January. Furthermore, when asked about their organization’s strategic response to tariffs, only 40% said they have no significant changes planned regarding their strategy for responding to tariffs and global trade dynamics.

Number of respondents: 665

KPMG’s Global Geopolitics team describes the current international scenario as a ‘Critical Recession’ – a transitional phase moving from a US-dominated era of globalization toward a more multipolar world. This shift sees emerging powers, including India, Brazil, Mexico and Türkiye, and economies in Southeast Asia, asserting their influence, leading to a more contested geopolitical environment. 

Rampant policy shifts and escalating trade tensions are driving a predictable economic slowdown across the Americas.

Pervasive uncertainty functions as an economic tax, stalling business investments and decision-making as executives across both North and South America grapple with a deeply unpredictable policy environment.

As businesses across the Americas continue to seek greater clarity, the impact is being felt on GDP growth, which is expected to decelerate to 2.7 percent in 2025, marking the weakest growth period across the region since the financial crisis of 2008/9. 

Despite the deepening economic concerns across the Americas, some opportunities for growth are emerging, with Brazil standing out as a beacon of potential amidst the gloom. Leveraging its close trade relationship with China, Brazil offers unique growth avenues, particularly in agricultural exports. The country’s strategic ties with China could mitigate some of the adverse impacts from US trade policies, positioning the country as a relatively stable player in the region. 

Europe faces a modest growth outlook in the short term, as uncertainty weighs on business investment and consumer confidence, with Eurozone GDP expected to increase by around 0.9% in 2025 and 1.1% in 2026.

The picture is mixed however, with subdued overall growth masking divergent performances across the continent. European economies are shaped by differences in economic fundamentals, as well as fiscal constraints and exposure to current geopolitical headwinds.

Southern and Eastern European economies such as Spain and Poland are performing strongly, thanks to robust domestic demand, targeted investment, and solid labour market performance.

In contrast, many core economies such as Germany and France continue to face structural and fiscal constraints that could limit their growth.

A changing geopolitical environment is driving a shift in European defence spending, with governments across the continent announcing plans to devote higher levels of funding. Initial increases are likely to focus on procurement spending, funded by increases in borrowing.

A commitment to increase borrowing may put further strain on government finances, potentially creating more pressure on highly indebted European governments and hastening the need to move away from debt finance.  

Trade uncertainty, driven in large part by the ongoing uncertainty over US trade policies is increasingly impacting economic conditions across the Asia-Pacific region, primarily due to the region’s high reliance on international trade. Economies like Singapore and Hong Kong (SAR), China stand out with their extraordinary export proportions, constituting 190 percent and 170 percent of GDP respectively.

KPMG International is predicting Singapore’s GDP growth could plummet by as much as 3 percent by early 2026, likely pushing the small city state into a recession. Similarly, Hong Kong’s GDP growth is expected to decline by about 1.5 percent within the same period, underscoring significant economic downturns.

China, the region’s economic behemoth, is also slated to experience a slowdown. Its GDP growth is predicted to reduce by about 0.5% by the end of 2025, with the impact intensifying to around 0.9% by 2027 due to the imposition of US tariffs. Japan and South Korea are not spared from these economic shocks either; Japan’s growth is likely to decrease to around 0.5% in 2026, while South Korea is expected to see a reduction of 1.5% by 2028. 

A recording of the June 2025 KPMG Global Economic Outlook webinar is available to watch in full by clicking on the link below:

kpmg.com/globaleconomicoutlook

Brian O’Neill
Senior Manager, Global Strategic Communications & Media Relations 
KPMG International

T: +44 7823 668 689 
E: Brian.O’Neill@kpmg.co.uk 

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