Baseline Macroeconomic Scenarios for Rated Sovereigns December 2024 Update

This commentary provides an update to Morningstar DBRS' Baseline Macroeconomic Scenarios. These baseline scenarios provide our estimate of the current market consensus, and are drawn from the median forecasts of various external contributors.

Key Highlights Include:
-- Consensus forecasts for 2025 and 2026 point to continued albeit lackluster growth.
-- The U.S. economy will likely slow, and China's economy continues to face domestic headwinds. Meanwhile, gradual economic recoveries in Europe and Japan should help broaden and rebalance global growth.
-- However, policy changes and geopolitical risks could generate negative surprises over the course of the next year.

"While we see some reasons for optimism in 2025, we see risks skewed heavily to the downside," cautions Tom Torgerson, Managing Director, Global Sovereign Ratings for Morningstar DBRS. "The actions of the U.S. and other major economies, particularly on the international trade or international security front, could generate a significant reassessment of economic growth prospects globally."