Citigroup Warns of US Dollar Weakness Amid BRICS Trade Expansion

Citigroup's mid-year economic outlook paints a concerning picture for the US dollar through 2026, with BRICS nations' de-dollarization efforts and persistent tariff pressures creating sustained headwinds. Global growth is projected to slow to 2.4% in 2025 before a marginal recovery to 2.5% the following year.

The bank notes early 2025 resilience came from tariff front-loading by businesses and consumers, but this temporary boost has exhausted. Rising import costs are now translating into domestic price pressures, threatening real incomes and spending growth. First-quarter private domestic demand growth of 2.5% may prove unsustainable as these effects fully materialize.

Structural shifts in international trade settlements, particularly through expanding BRICS mechanisms, pose a longer-term challenge to dollar dominance. These developments coincide with fragile economic conditions where tariff uncertainties continue distorting purchasing patterns.