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MARCH 2026

Real GDP Growth (2025) (y-o-y%)

5.4 5.2
4.8 4.5

2 2.1 2.3 2.2 1.7 1.7 1.6 1.5 1.8 1.4 1.2 1 1.6 2 0.6 0.1

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
United States European Union United Kingdom Japan China

Source: National Sources: U.S. Bureau of Economic Analysis; EUROSTAT; Office for National Statistics, UK; Cabinet Office, Japan; National Bureau of
Statistics of China

In EU, real GDP growth accelerated to 1.5 per cent on Real GDP growth in Japan rebounded to 1.1 per cent in
y-o-y basis in 2025 as compared to 1.2 per cent in 2024. 2025 as compared to a contraction of 0.2 per cent seen
Quarterly GDP prints show that real GDP growth was in 2024, supported by a strong first-half growth which
slightly higher in the first half of 2025 (averaging 1.7 per stood at an average of 1.8 per cent before moderating to
cent) driven by investments and exports, followed by a 0.4 per cent in the second half of the year. The growth
slight moderation in the second half, as private slowdown was underpinned by a deceleration seen in
consumption weakened. The IMF expects EU growth to exports and consumption which necessitated a fiscal
be maintained at 1.5 per cent in 2026, but structural stimulus to reinvigorate domestic demand in the
constraints like weak productivity, industrial Japanese economy. Due to rising trade tensions which
competitiveness pressures, and limited spillovers from has been exacerbated by a strong Yen against the US
the global technology cycle elevate risks. dollar, growth is expected to slow down to 0.7 per cent in
2026 (according to the IMF).

Growth trends highlight a fragmented The growth in real GDP in China has been 5 per cent in
global recovery where US showed 2025 and is projected to decelerate to 4.5 per cent in
resilience, while Europe and Japan 2026. Chinese economy was expected to grow at a
were constrained by weaker demand slower pace in 2025. However, growth proved to be
more resilient than initially forecasted, aided by
and structural headwinds
front-loading of exports, lower effective tariff by the US
(through negotiations), relatively robust domestic
consumption and fiscal expansion, which proved to be
Real GDP growth in UK increased from 1.1 per cent in bulwarks against downward pressures.
2024 to 1.4 per cent in 2025 on y-o-y basis and is
projected to slightly moderate to 1.3 per cent in 2026 (as While growth has remained broadly stable, its
per IMF estimates). UK experienced higher inflationary composition across economies highlights emerging
pressures in 2022–2024 due to energy shocks, supply demand and supply side imbalances. Strong domestic
disruptions, and high labour demand, which had an demand in some economies and persistent cost
impact on growth. Growth was stronger in the first half of pressures in others have shaped inflation dynamics
2025 (at 1.6 per cent), supported by robust economic unevenly. Against this backdrop, it is important to
activity and improved external conditions, including the understand evolving price pressures and the monetary
US–UK trade deal. Subsequently, energy prices stabilized policy response to assess the sustainability of the
and wage growth moderated, leading to easing inflation. present growth trajectory
This supported real incomes and consumer confidence
and contributed to overall growth in 2025.

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