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Major corporations around the globe are trimming their forecasts, signaling a tougher road ahead for growth in 2025 and beyond.
As global economies navigate a complex web of challenges—from elevated inflation and rising tariffs to lingering pandemic aftershocks—corporate executives are sounding the alarm. This article explores the data behind downward revisions, the forces driving caution, and what businesses and investors can do to adapt and thrive.
Global growth projections have been steadily revised downward, reflecting a mix of cyclical and structural headwinds. The OECD now forecasts global GDP growth of 2.9% in both 2025 and 2026, down from 3.3% in 2024. The United States, once a driver of near-term momentum, is expected to slow from roughly 2.5% in late 2024 to 1.7% by the end of 2025.
Inflation remains stubbornly above target in many regions. The OECD lifted its 2025 inflation forecast to 4.2%, up from 3.7%, while U.S. core inflation is expected to finish next year between 3.0% and 3.5%. Central banks are holding rates higher for longer, further weighing on consumer spending and investment.
Major companies have been quick to adjust their outlooks. Procter & Gamble, facing cross-border duties, now anticipates flat sales growth for its fiscal year 2025, compared to an earlier target of 2–4%. The consumer goods giant also cut its core EPS guidance to $6.72–$6.82, down from $6.91–$7.05.
PepsiCo, too, warned of weaker consumer spending and rising input costs, trimming its core earnings per share forecast by 3% rather than boosting it. CEO Ramon Laguarta cautioned, “We expect more volatility and uncertainty, particularly related to global trade developments, which we expect will increase our supply chain costs.”
Indeed, at least 51 S&P 500 companies explicitly cited tariffs in their 2025 guidance, while nine firms have either withheld or revised forecasts until trade negotiations clarify the picture. Only a handful have completely withdrawn guidance thus far, but many are moving to cautious forward guidance across sectors.
Several interlocking factors are forcing executives to temper expectations. On top of cyclical slowdowns, structural issues are reinforcing the drag on output.
Tariffs have emerged as a top concern, with over 1,100 mentions in quarterly calls this year. Industrial firms, in particular, are wrestling with volatile consumer and geopolitical environment and struggling to model cost pass-through.
Meanwhile, capital spending remains muted. Companies are reluctant to commit to large-scale projects as they contend with uncertain macroeconomic outlook and growth prospects. This weak investment cycle compounds the effects of slower demand, curbing productivity gains over time.
Investor confidence has mirrored corporate caution. CEO sentiment indicators fell sharply in the last quarter, marking the biggest drop since early 2022. As a result, companies that miss earnings estimates now see an average stock price reaction of -4.28%, a level not seen since 2017.
The labor market, once a bright spot, is also cooling. Unemployment in the U.S. is projected to rise to 4.6% in 2025 before gradually easing back. Such a shift could further dampen wage growth and consumer spending, tightening the feedback loop between labor and demand.
Global investment, already on a slow trajectory since the financial crisis, is not expected to pick up materially. With subdued consumer demand amid uncertainty, businesses are prioritizing liquidity and flexibility over expansion, leaving the door open for prolonged stagnation if risks crystallize.
The horizon for 2025 is fraught with potential flashpoints. Trade negotiations due in late July could either relieve tariff burdens or extend the standoff, affecting supply chains worldwide. Meanwhile, any resurgence in inflation or renewed geopolitical volatility would likely prompt further guidance cuts.
Against this backdrop, companies and investors must stay agile. Scenario planning, diversified supply chains, and disciplined cost management will be critical tools. For boardrooms and balance sheets alike, the message is clear: resilience and adaptability are as important as ever in a world of heightened trade tensions and policy uncertainty.
Though the coming months may be challenging, organizations that proactively address these headwinds can emerge stronger. By leveraging data-driven insights and maintaining strategic flexibility, businesses can navigate lower growth expectations and chart a course toward sustainable performance despite the uncertainty that lies ahead.
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