S&P Downgrades US Growth Amid Tariff Turbulence

S&P Global Ratings has reduced the US GDP growth forecast for 2025 to 1.5% and 1.7% for 2026 due to rising tariffs and global market uncertainties. Despite heightened risks, S&P rules out a US recession for now. The tariff-induced market shock has led to GDP forecast reductions in other major economies too.

S&P Global Ratings has adjusted its forecast for US GDP growth, cutting the 2025 projection by 50 basis points to 1.5% and the 2026 outlook by 20 basis points to 1.7%. The move coincides with an upward revision of the inflation forecast and reflects increased downside risks across global markets. Despite these adjustments, S&P maintains there is no immediate concern for a US recession.

The revised growth forecasts emerge in the context of rising uncertainties fueled by reciprocal tariffs initiated by the United States. Concurrently, S&P has also downgraded growth estimates for other major economies, including India, Canada, and several European nations.

Echoing concerns over shifting US trade policies, S&P highlighted the repercussions of elevated import tariffs, retaliatory actions by trading partners, and heightened market volatility. The agency's Global Chief Economist Paul Gruenwald noted the potential for greater economic disruption from these tariff shocks than previously anticipated. S&P's statement underscores the precarious scenario posed by increased protectionism in global economic landscapes.

(With inputs from agencies.)