Accounting
KPMG Global Economic Outlook forecasts slight global GDP growth
KPMG International forecasts a slight increase in global GDP growth in 2025, followed by a dampening in 2026 due to the incoming U.S. administration’s expected policies.
The
KPMG forecasts the pace of inflation will continue cooling between now (4.5%) and mid-2025 (3.5%). “Thereafter, the forecast depends heavily on the pace of tariffs and whether we see a full-blown trade war erupt,” the report reads, citing elevated geopolitical risk and the outcomes of the U.S. election, such as inflationary trade, immigration policies and tariffs. “Bond yields have already moved up in response to fears of mounting federal debt and higher inflation. Any major shift in tariffs in the U.S. could trigger retaliatory measures.”
Sean Gallup/Getty Images Europe
“The data in our latest report highlights the concerted effort that was being made by central banks throughout the world to control the cost of living and inflation challenges facing everyone, including businesses, right now,” Regina Mayor, global head of Clients & Markets at KPMG International, said in a statement. “While there was cautious optimism of a return to eventual sustainable growth, we’re now in a ‘wait and see’ phase with much depending on a future potentially driven by reciprocal tariffs.”
KPMG sees mergers and acquisition activity poised to increase with lower rates and stores of
Fiscal policy may be more stimulative, the report says, with market participants expecting a new wave of stimulus in the form of pensions, healthcare and defense. Tax cuts are also expected to be extended in the U.S., but it remains to be seen how multinationals outside of the U.S. will be treated.
“Our latest forecast highlights the tightrope political and business leaders are now walking,” Benjamin Shoesmith, senior economist at KPMG US, said in a statement. “For many central banks, including the US Federal Reserve, we’re seeing a shift from the battle against inflation to guiding economies toward a soft landing. It’s a monumental challenge balancing price stability and employment without quashing GDP growth. The tailwind from lower rates will benefit firms and consumers and likely spark mergers and acquisitions activity. Central banks must stay the course and avoid the temptation to cut interest rates too early or too fast as this could derail progress.”
Shoesmith said that while he expects growth nearing pre-prandemic rates, volatility will also rise. He said leaders’ top concerns are policy uncertainty as a result of the U.S. election, challenges of artificial intelligence, more frequent and adverse weather events and elevated geopolitical risk.
“Our long-term view is that we can see a return to more sustainable growth that edges closer to pre-pandemic levels, but with two significant caveats,” Shoesmith continued. “The first is that central banks will need to hold their nerve and avoid the temptation to pivot on policies before they pay off. The second — and arguably most profound caveat — is the current geopolitical crisis. If the challenges facing the Middle East and Ukraine continue to deepen, leaders could be faced with a fresh set of dilemmas that run far deeper than GDP.”
The House unanimously passed four bipartisan bills Tuesday concerning taxes and the Internal Revenue Service that were all
- H.R. 1152, the Electronic Filing and Payment Fairness Act, sponsored by Rep. Darin LaHood, R-Illinois, Suzan Delbene, D-Washington, Randy Feenstra, R-Iowa, Brad Schneider, D-Illinois, Brian Fitzpatrick, R-Pennsylvania and Jimmy Panetta, D-California. The bill would apply the “mailbox rule” to electronically submitted tax returns and payments to allow the IRS to record payments and documents submitted to the IRS electronically on the day the payments or documents are submitted instead of when they are received or reviewed at a later date. The AICPA believes this would offer clarity and simplification to the payment and document submission process while protecting taxpayers from undue penalties.
- H.R. 998, the Internal Revenue Service Math and Taxpayer Help Act, sponsored by Rep. Randy Feenstra, R-Iowa, and Brad Schneider, D-Illinois, which would require notices describing a mathematical or clerical error to be made in plain language, and require the Treasury to provide additional procedures for requesting an abatement of a math or clerical error adjustment, including by telephone or in person, among other provisions.
- H.R. 517, the Filing Relief for Natural Disasters Act, sponsored by Rep. David Kustoff, R-Tennessee, and Judy Chu, D-California. The process of receiving tax relief from the IRS following a natural disaster typically must follow a federal disaster declaration, which can often come weeks after a state disaster declaration. The bill would provide the IRS with authority to grant tax relief once the governor of a state declares either a disaster or a state of emergency and expand the mandatory federal filing extension under Section 7508(d) of the Tax Code from 60 days to 120 days, providing taxpayers with more time to file tax returns after a disaster.
- H.R. 1491, the Disaster related Extension of Deadlines Act, sponsored by Rep. Gregory Murphy, R-North Carolina, and Jimmy Panetta, D-California, would extend the amount of time disaster victims would have to file for a tax refund or credit (i.e., the lookback period) by the amount of time afforded pursuant to a disaster relief postponement period for taxpayers affected by major disasters. This legislative solution would place taxpayers on equal footing as taxpayers not impacted by major disasters and would afford greater clarity and certainty to taxpayers and tax practitioners regarding this lookback period.
“The AICPA has long supported these proposals and will continue to work to advance comprehensive legislation that enhances IRS operations and improves the taxpayer experience,” said Melanie Lauridsen, vice president of tax policy and advocacy for the AICPA, in a statement Tuesday. “We are pleased to work closely with each of these Representatives on common-sense reforms that will benefit taxpayers, tax practitioners and tax administration and we’re encouraged by their passage in the House. We look forward to continuing to work with Congress to improve the taxpayer experience.”
The bills were also included in a recent Senate
The House also passed two other tax-related bills Tuesday that weren’t endorsed in the recent AICPA letter.
- H.R. 1155, Recovery of Stolen Checks Act, sponsored by Rep. Nicole Malliotakis, R-New York, would require the IRS to create a process for taxpayers to request a replacement via direct deposit for a stolen paper check. If a check is determined to be stolen or lost, and not cashed, a taxpayer will receive a replacement check once the original check is cancelled, but many taxpayers are having their replacement checks stolen as well. Taxpayers who have a check stolen are then unable to request that the replacement check be sent via direct deposit. The bill would require the Treasury to establish processes and procedures under which taxpayers, who are otherwise eligible to receive an amount by paper check in replacement of a lost or stolen paper check, may elect to receive such amount by direct deposit.
- H.R. 997, National Taxpayer Advocate Enhancement Act, sponsored by Rep. Randy Feenstra, R-Iowa, would prevent IRS interference with National Taxpayer Advocate personnel by granting the NTA responsibility for its attorneys. In advocating for taxpayer rights, the National Taxpayer Advocate often requires independent legal advice. But currently, the staff members hired by the National Taxpayer Advocate are accountable to internal IRS counsel, not the Taxpayer Advocate, creating a potential conflict of interest to the detriment of taxpayers. The bill would authorize the National Taxpayer Advocate to hire attorneys who report directly to her, helping establish independence from the IRS.
House Ways and Means Committee Chairman Jason Smith, R-Missouri, applauded the bipartisan House passage of the various bills, which had been unanimously passed by the committee.
“President Trump was elected on the promise of finally making the government work better for working people,” Smith said in a statement Tuesday. “This bipartisan legislation helps fulfill that mandate and makes improvements to tax administration that will make it easier for the American people to file their taxes. Those who are rebuilding after a natural disaster particularly need help filing taxes, which is why this set of bills lightens the load for taxpayers in communities struck by a hurricane, tornado or some other disaster. With Tax Day just a few days away, we must look for common-sense, bipartisan ways to make filing taxes less of a hassle.”
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