Baseline Macroeconomic Scenarios for Rated Sovereigns March 2025 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.

-- Consensus forecasts for 2025 and 2026 point to continued lackluster growth.

-- The U.S. economy will likely slow, and China's economy continues to face domestic headwinds. Meanwhile, growth in Europe and Japan is only gradually picking up.

-- Policy changes and geopolitical risks could generate additional negative surprises in the near term.

"The overall growth outlook remains broadly favorable, but we view risks to growth as skewed to the downside," notes Thomas Torgerson, Managing Director, Global Sovereign Ratings for Morningstar DBRS. "Tariff threats and other global developments have had a negative impact on market sentiment in recent weeks, while consumers and business are grappling with added uncertainty."