Global Macro Trends
The United States' aggressive trade policy has notable effects on global commerce and markets.
The announcement at the beginning of the month by US President D. Trump of higher-than-anticipated tariffs on products from nearly every country, followed by a suspension for 90 days to facilitate bilateral negotiations, and the commencement of a trade war with China (including significant tariffs on Chinese products and fees for Chinese-built or affiliated ships docking at US ports, effective in 180 days), is rapidly altering the global landscape. This swift change is further exemplified by rising uncertainties surrounding established geostrategic alliances. The notable depreciation of the US dollar over the past month, President Trump’s displeasure with the Federal Reserve chairman on pertinent monetary policy decisions, and the relatively high yields of US government bonds underscore the prevailing uncertainty regarding US policy.
In the US, recent economic data show ongoing growth at a relatively strong pace, favorable labor market conditions, and inflation moving towards the Fed's target. However, due to tariffs and significant uncertainty regarding future economic conditions, there is concern that demand will be adversely impacted and inflation will rise in the short term. Consequently, many leading indicators have recently recorded a significant decline, suggesting an increased likelihood of a slowdown in growth. The possibility of contraction in one or more of the upcoming quarters can no longer be ruled out.
The formation of a new government in Germany anticipated at the beginning of May and the recent vote by the German parliament to exclude defense spending from the public deficit/debt calculations, along with the establishment of a €500 billion fund for long-term infrastructure projects, have fostered optimism regarding economic prospects in the Eurozone. Additionally, historically low unemployment rate and the ECB's reduction of its key interest rates contribute positively to this outlook. Conversely, concerns persist about intensifying competition in the domestic market, as redirected exports from other major economies due to US tariffs may exert pressure on prices, domestic production—particularly in manufacturing—and profit margins.
In China, the growth rate in the first quarter surprised positively as it stood at 5.4% year-on-year for the second consecutive quarter. However, consumer prices in China decreased for the second consecutive month in March, indicating limited domestic demand. This, combined with the reduced access to the US market due to tariffs and decreased global demand, raises questions about the country's ability to maintain rapid growth in the medium term.