Global Economic Outlook, week 21, 2025

Overall Market Review

Over the same period, macroeconomic indicators painted a mixed picture: in the United States, headline inflation and producer prices eased even as retail spending and consumer sentiment weakened; in the United Kingdom, April inflation was set to spike sharply amid higher energy and water bills, prompting warnings of “greedflation”; in the euro area, consumer prices held modestly steady; in China, exports exceeded expectations despite a slowdown in the services sector; in Japan, Q1 GDP unexpectedly contracted even as Tokyo’s core inflation accelerated; in Oceania, markets fully priced in an imminent Reserve Bank of Australia rate cut on moderating core inflation; and in emerging markets, economies grappled with downgraded growth forecasts, fiscal strains in South Africa, and competitive pressures from inexpensive Chinese imports.

Overall, the week underscored the fragile state of the global economy: while the U.S.–China trade deal provided temporary relief, it did little to resolve underlying vulnerabilities. Growth forecasts for major economies were revised downward, recession fears resurfaced, and fiscal pressures mounted, particularly in emerging markets. The euro area and Japan faced modest growth prospects, and although Oceania showed relative stability, significant disparities persisted across regions. Policymakers now face the challenge of balancing trade-offs, rebuilding fiscal buffers, and fostering inclusive growth amid ongoing uncertainties.