New forecasts from the World Bank slice U.S. real GDP in half from 2024 levels on trade and tariff policy risks and impacts. While the global economy at large is forecast to contract, impacts to Europe, Japan, and other countries appear less than those to the U.S. It’s an environment that favors looking overseas for opportunities through funds like the actively managed T. Rowe Price International Equity ETF (TOUS ).
A new report from the World Bank cut U.S. real GDP forecasts to 1.4% for 2025, down from 2024’s 2.8%. It’s a 0.9% cut from January estimates due to current U.S. tariffs and trade policy. The bank also revised forecasts down for most regions overseas. The Euro area will experience contracting year-over-year, from 0.9% in 2024 to 0.7%. Meanwhile Japan is still forecasted for 0.5% GDP growth year-over-year in 2025, despite downward revisions.
“Global financial conditions have been tighter this year, on average, relative to late 2024, principally reflecting trade policy uncertainty,” World Bank noted in their report. “Against this backdrop, global growth is set to slow this year, to 2.3 percent—substantially weaker than previously projected amid the impact of higher trade barriers, elevated uncertainty, increased financial volatility, and weakened confidence.”
Active Management a Benefit When Investing Overseas
Tariff and trade uncertainty have outsized implications for many countries. Developed and emerging market countries face notable slowing this year, though not unilaterally. Active management could prove a boon in navigating the evolving market risks of 2025.
Advisors and investors looking to opportunities overseas should consider the actively managed TOUS. The fund continues to experience steady inflows nearing the end of the first half, up nearly $550 million YTD as of June 6, 2025.
The strategy centers on the bottom-up research and fundamentals of individual companies. That said, TOUS’s fund managers do take macro factors into account when constructing the portfolio. These include sector, industry, and individual country outlooks.
TOUS invests across the market-cap spectrum but generally focuses on large-caps in developed markets. The fund managers evaluate a company’s fundamentals, earnings potential, and relative valuation to peers when constructing the portfolio. This results in a portfolio that may offer both value and growth exposures at any given time.
Individual country allocations and weights are generally the result of the bottom-up stock selection. However, the manager may limit an individual country’s weight should its macro outlook appear less favorable.
In addition to diversified country exposure, TOUS also provides diversification at the sector level. Top sector allocations included financials (47.07%), industrials (35.45%), and healthcare (22.33%) as of May 31, 2025. As with country weights, the manager may limit sector/industry exposures depending on the macro environment and outlooks.
TOUS has a management fee of 0.50%, which is competitive among international ETFs, especially those with an active research-driven approach.
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