Chief Economists Outlook May 2025

13Chief Economists Outlook It is notable that the US labour market has remained relatively resilient through the turmoil of the early months of this year. In the view of many chief economists, if the labour market were to weaken significantly, it could signal a more disruptive phase for US growth. There have been some signs of softening, but job data remained steady in March and April.21 Moreover, despite the sharp volatility in the US economy in recent months, there continue to be positive signals for the medium and long term. For example, greenfield foreign direct investment (FDI) into the US is soaring, with the value of projects surging by 93% to $266 billion, as a result of semiconductor megaprojects.22Elsewhere in North America, deep trade and supply chain integration with the US means that both Mexico and Canada are acutely exposed to shifts in US economic policy. This vulnerability is reflected in the latest projections from the IMF, which in its latest round of forecasts – conducted in early April when uncertainty was at a peak – points to growth in Canada of just 1.4% in 2025, a downward revision of 0.6 percentage points since January.23 In Mexico, the repercussions of the threatened US trade policy pivot were even more pronounced, with the IMF forecasting that real GDP would contract by 0.3%, a sharp downgrade of 1.7 percentage points.24 Europe Figure 9. Europe in the remainder of 2025 Economic growth Very weak Weak Moderate Strong Very strong Inflation Fiscal policy Monetary policyVery low Low Moderate High Very high Looser Unchanged Tighter Looser Unchanged Tighter3 31 77 76 21 314 954 1450 36 11 Source: Chief Economists Survey. (2025, April). The outlook for the European economy is showing signs of improvement, albeit from a weak base after years of lacklustre growth. Half of chief economists still expect growth to remain weak this year (in line with IMF projections of 0.8% growth for the Eurozone25), and only 11% expect strong growth, but this still represents a notable improvement from previous surveys. One key factor in the brightening around Europe’s economic prospects is the hope for an expansionary shift in fiscal policy, which is now expected by 77% of chief economists. 21 Bureau of Labor Statistics. (2025b). 22 United Nations Trade and Development (UNCTAD). (2025a). 23 International Monetary Fund (IMF). (2025b).24 International Monetary Fund (IMF). (2025b). 25 International Monetary Fund (IMF). (2025b).