Our Q2 2025 nowcasts, which measure trend growth (excluding exceptional effects), highlight the resilience of the Eurozone (+0.3% q/q) and, to a lesser extent, France (+0.2% q/q). Weaker exports (after their surge in Q1 in anticipation of the US trade tariffs) penalises our forecast in Q2 (-0.1% in the Eurozone).
It’s the opposite for the US (-0.1% q/q in Q1) with the Atlanta Fed nowcast at +0.7% for Q2 (imports down compared to Q1). With an average of 0.25% in H1 however, US growth is estimated to have slowed down (compared to 0.6% per quarter in 2024); that of the Eurozone (0.25% on average in H1, compared to 0.35% on average in H2 2024) is expected to be more stable. Our Q2 growth expectations for Eurozone members, the UK and China also point to a slowdown.
Japan is not expected to emerge from the stagnation observed in Q1.
Economic indicators for Q3 2025
Business climate: better in Europe
The June surveys show an improvement in almost all countries, including those where the trend has been more unfavourable so far (the United States, Japan, China). In France, however, this improvement is not widespread (in construction only).
Household confidence: stabilisation after an upturn. Surveys showed an improvement in May
This is not called into question in June where a relative stabilisation is observed. In the US, uncertainty remains high as surveys deliver different messages on household sentiment and the extent of the slowdown in their consumption.
Labour market: positive signs prevail
The situation remains favourable in the Eurozone countries and the US, and the employment rate continues to rise in Japan. More negative signals are appearing in the United Kingdom (job destruction) and in China (reduction in the number of hours worked).
Inflation: are the good surprises behind us?
Inflation has reached the ECB's target in the euro area and is not yet impacted by tariffs in the US. However, inflation expectations remain high in the US. In Japan, inflationary pressures are increasing. Inflation is stabilising at a significant level in the UK. China remains in deflation.
Monetary policies: towards a rotation?
The ECB is expected to cut its key interest rate by 25 bps one last time in September. Speculation about when the Fed might take over persists. The FOMC is divided, but we still believe the Fed will only ease policy in 2026. In Japan, the central bank announced that it will slow down its pace of the reduction of its JGBs purchases. In the UK and China, gradual monetary easing is expected to continue (25 and 10 bps per quarter, respectively).
Credit in the Eurozone: towards a rotation (bis)?
Bank financing to Eurozone companies is slowing down as cash loans are slowing, while the increase in investment loans is continuing. Meanwhile market-based financing is on the rise. However, the recent drop in bank loan rates could lead to an increase in demand for these loans. Finally, bank financing to households is accelerating from sluggish levels.
Article completed on July 4, 2025
