21st April 2025
Global Growth Outlook and Trade Tensions:
The IMF is set to downgrade global growth forecasts due to rising trade tensions, especially following the US’s sweeping new tariffs and the resulting countermeasures from China, the EU, and others.
While a global recession is not expected, the probability of a US recession within the next year has risen to 45%, the highest since late 2023.
The IMF and ECB both warn that prolonged uncertainty and higher tariffs will significantly suppress growth, dampen confidence, and increase costs for the global economy. The ECB specifically notes that trade frictions and regulatory hurdles are risks to euro area growth, with global trade momentum slowing and manufacturing export orders declining.
Eurozone Bond Market and Capital Flows:
A sharp rise in German Bund yields in March triggered significant spillover effects across Eurozone bond markets, with yields in other countries moving almost in lockstep with those of Germany.
Investors have increasingly shifted capital from US Treasuries to German bonds and the euro, seeking safe havens amid uncertainty in US policy and trade turmoil. This has led the euro to reach three-year highs, despite a widening yield gap that usually favours the dollar.
The capital outflow from North America into Europe is partly driven by concerns over US trade policy and financial market volatility, with German bonds seen as a more reliable alternative.
China’s E-commerce and Trade War Response:
Chinese e-commerce giants Alibaba and Pinduoduo are intensifying competition, with merchants caught in the middle, some alleging “forced exclusivity” practices by Alibaba.
Both companies are launching major initiatives to help exporters pivot to domestic sales in response to US tariffs and the end of duty exemptions, with large subsidies and promotional campaigns.
The rivalry is reshaping China’s e-commerce landscape, driving innovation in social commerce and discount platforms, and reflecting broader efforts by Chinese tech firms to support the domestic economy amid escalating trade tensions.
News written by Iskander Shyngyssov | Published by Zhangir Zhangaskin
