S&P cuts US growth forecast sharply but rules out chances of a recession

Washington DC [US], May 2 (ANI): S&P Global Ratings has lowered the US GDP forecast for 2025, sharply by 50 basis points to 1.5 per cent, while raising its inflation forecast. For 2026, the US growth projection has been lowered by 20 basis points to 1.7 per cent.

While there is an increased risk to the downside across all regions but S&P does not anticipate a material slowdown in growth. "We see a material slowdown in growth, but do not foresee a US recession at this juncture," it said.

This growth projection by the rating agency S&P comes amid uncertainties arising out of the reciprocal tariffs announced by the US.

Along with the US, S&P today lowered growth projections for several other large countries - India, Canada, Europe, Germany, Italy, the UK, China, Japan, among others.

"A seismic shift in US trade policy has added to the uncertainty that has roiled markets and raised the specter of a global economic slowdown," S&P argued in its Global Macro Update.

To help understand the potential effects, S&P has updated its macro view, including GDP growth and inflation forecasts and chances of a recession.

"The jump in US import tariffs, trading partner retaliation, ongoing concessions, and subsequent market turbulence constitute a shock to the system centered on confidence and market prices. The real economy is sure to follow, but by how much?" said S&P Global Ratings Global Chief Economist Paul Gruenwald.

"The risks to our baseline remain firmly on the downside in the form of a stronger-than-anticipated spillover from the tariff shock to the real economy. The longer-term configuration of the global economy, including the role of the U.S., is also less certain," said Gruenwald.

Since assuming office for his second term, President Donald Trump has reiterated his stance on tariff reciprocity, emphasising that the United States will match tariffs imposed by other countries, including India, to ensure what he termed "fair trade". The tariffs have been kept in abeyance for 90 days, as several countries have reached out to the US administration for a trade deal.

The April 2 tariffs and their aftermath have led S&P to lower the GDP growth forecasts. It reiterates that there are no winners in a scenario of escalating protectionist policies. (ANI)

(The story has come from a syndicated feed and has not been edited by the Tribune Staff.)