Scope Ratings has adjusted its growth forecasts for the United States and the euro area, reflecting a more cautious outlook due to ongoing trade uncertainties and changes in government spending policies. The agency has recently updated its estimate for US economic growth in 2023 down to a 1.8% increase. That’s a drop from last October’s prediction of 2.7%. Even with this revision, Scope Ratings continues to hold a firm outlook on US economic growth of 1.8% in 2026.
By contrast last year the US’s output rose by 2.8%, posting the kind of growth you’d think would herald a sustained boom. The updated forecast for the current year brings ominous news — trade war tensions. It points to damaging cuts in government operating budgets, particularly by the Department of Government Efficiency. All these elements have come together to create a much cooler economic landscape here in the States.
Indeed, Spain and the other euro-area peripheral economies, such as Greece, Ireland and Portugal, are outpacing their larger eurozone peers by a hefty margin. This is in sharp contrast to how the US has done. Spain’s growth forecast has been increased by 0.3 pp, to 2.5% this year. This is all great news and looks even better when placed in the context of Germany’s snail-like pace. Germany’s misfortunes are bound to sink growth throughout the whole euro area.
Germany’s growth forecast has been reduced to nil for 2023, a dramatic reduction from the 0.9% expected before. Despite these challenges, the country is faring well economically, with expected growth of 0.2% in its output in 2024. We at Scope Ratings are confident that Germany will recover from its years of malaise. As for their neighbors to the north, they’re counting on a modest 1.2% growth rate by 2026.
Growth around the euro area is proven to be lower than anticipated. Scope Ratings further estimates just a 1.1% increase this year — 0.5 percentage points lower than previous forecasts. While unfortunate, this change is indicative of the larger economic realities affecting major players in the area.
Meanwhile France has lowered its growth forecast for this year to 0.7%. That’s down from the last estimate by 0.6 percentage points. Italy’s prospects for change look less hopeful today. Their updated forecast has fallen to a paltry 0.6%, a reduction of 0.4 percentage points from their last estimate.
By 2026 Scope Ratings forecasts a more pronounced rebound in Europe. This expansion will be fueled by higher defense spending and government policies aimed at raising investment. This move would be a welcomed jolt to many regional, especially rural, economies dealing with low-growth or no-growth rates.
On a global scale, Scope Ratings expects growth to decelerate to 3.0% in 2025, from 3.3% in 2024. The agency projects that growth will level off next year to a more moderate 3.1% rate. This macroeconomic lens illustrates how connected our economies have become and emphasizes how our challenges at home can reverberate across the globe to influence international economic conditions.