Global economy in earthquake

The trade war is at risk of spreading and many political fluctuations and conflicts are taking place, causing the global economy to face great challenges.

Moody's Analytics (part of Moody's Financial Services Group) has just sent Thanh Nien a new report on the world economic situation.

Consumer prices in the US are showing signs of rising.

Difficulties get more difficult

The global economy is entering a period of severe uncertainty, according to Moody's Analytics. The United States has outperformed its allies over the past three years, but its economy is showing cracks. Europe remains stuck in stagnation, significantly affected by capacity problems, declining manufacturing and deep structural instability. Meanwhile, the UK economy is particularly weak.

China is close to its 2024 growth target (4.8% against a target of 5%) but domestic demand remains sluggish, putting pressure on the economy. Japan, Canada and Australia are each facing their own constraints. India and other emerging economies outside China are doing better, but they are certainly not immune to global economic uncertainties.

Meanwhile, just a few weeks after taking office as US President, Donald Trump has implemented a series of tariff measures aimed at both allies and opponents. The US's two-time tax increase of a total of 20% on Chinese goods is just the beginning of the trade war. The White House also applied a 25% tax rate on steel and aluminum from all countries. Not to mention, the Trump administration is considering increasing taxes on copper and wood products, considering new tariffs on goods from the EU and its allies in Asia. That makes the trade war really explode, not just a potential risk.

Many consequences

The developments have disrupted markets, with recent surveys showing declining business expectations, slowing consumer spending and a struggling retail and labor market. In fact, real US GDP may even have contracted in the first quarter of this year.

That has a significant impact on monetary policy as well as inflation control.

Inflation in the US has been falling for the past two years, but this positive development is now being challenged. US inflation has risen again. At the same time, other economies are facing rising food and energy costs and falling currency values, making life difficult for people. This situation is evident in Japan, where inflation in January 2025 reached 4% compared to the same period in 2024.

The negative inflation picture may cause central banks to limit monetary policy easing. The US Federal Reserve (Fed) is delaying cutting the operating interest rate to assess developments, especially when inflation is showing signs of rising again due to tariffs, trade wars and government spending cuts. A more cautious Fed will lead to global monetary easing taking place more slowly than expected.

However, the report expects other central banks to be less affected by the Fed's policy, with the European Central Bank (ECB) and the Bank of England likely to continue cutting interest rates until the end of the third quarter of 2025.

Commenting on the Chinese economy, Moody's Analytics assessed that the government's target of about 5% growth this year is in line with the ambition and results of 2024. However, if in 2024 exports become an important factor to nearly reach the growth target, this pillar will be very difficult in 2025 due to the impact of the trade war.

In addition, the report also pointed out a number of other challenges of the global economy, such as the unpredictable conflict in Ukraine which has had a significant impact on the global energy market, or political fluctuations in Europe which have also had a significant impact.

US stock market lost 5,000 billion USD in 3 weeks

Last night, CNBC cited statistics showing that the US stock market has lost more than $5 trillion in market value in just the past three weeks. Specifically, the market value of the S&P 500 at its peak on February 19 was $52.06 trillion, but by March 13, the continuous decline left the market at only $46.78 trillion.

The decline comes amid a trade war sparked by President Trump's tariff policies that has rattled markets.

Source: https://thanhnien.vn/kinh-te-toan-cau-trong-con-dia-chan-185250314225705827.htm