Weekly Data Summary Report
As of March 31, 2024
In this report, we will assess major economies, including the United States, the United Kingdom, and the Eurozone, mainly based on their economic indicators and economic events that have occurred within this week.
The Eurozone
The situation between the EU and Trump remains intense as all await the April tariff confirmation from both economies. As per German Chancellor Scholz, “Europe’s goal is cooperation, but the EU will respond as one if the US leaves us no choice, such as with steel and aluminum tariffs,” leaving some room for further negotiation before the deadline comes. The European Central Bank also downgraded net-export projection for 2025, hinting at a cautious outlook as an uncertain trade loomed. In fact, analysts cited that, “A 25% U.S. tariff on EU exports could reduce EU GDP by 0.33% to 0.4% in the short term, with longer-term impacts potentially greater if retaliation spirals.” Additionally, export-heavy nations like Germany (automotive), Italy (machinery), and Ireland (pharmaceuticals) could face recessionary pressures.
So having said that, if the EU and US relationship becomes more strained, then both economic growth will definitely be hit by a significant blow. Furthermore, with an 80% chance of a 0.25% ECB rate cut in April, all are likely to bring more inflation while weakening the EUR against other currencies. And if the ECB really eases, then it is seen that the ECB is now prioritizing saving the economy rather than controlling the inflation.
The United Kingdom
The United Kingdom remained in a weak state as growth continued to soften, inflation stayed above the target and public debt concerns still loomed. In fact, economists forecast to see a stagnation and external shocks from Trump’s tariffs policy fall on the UK economy. Goldman Sachs projects a 0.2%-0.3% GDP in 2025 if the tariff continues with its current trend. The only positive news is wages now outpace the inflation data, offering some relief for a while, albeit we’re all knowing that inflation could eat up the consumer spending at any time. For the tariff problem, although the full materialized tariff would not affect as much as the EU’s, this will heighten the inflation risk, weakening the consumer confidence, softening growth, and lowering the GBP against other currencies.
The United States
Not only to its peers, President Donald Trump is now reshaping the US economy, given how we are now seeing a weaker investor sentiment; higher inflation expectation comes into play while the growth begins to weaken.
Many analysts are now downgrading the GDP forecast, which some also project to be below potential growth (as per Atlanta FED) and some down to 1.7% (Deloitte), all suggesting an uncertainty in policy and tariff effects. So now, if Trump really imposes retaliatory tariffs as expected on April 02, this will fuel more stagflation fear in the market. Therefore, we are now seeing a cautious approach from the Federal Reserve.
Aside from that, Trump also threatened Russia, Ukraine, and Iran with new tariff sanctions and economic aids.
- Threaten Russia’s oil market if peace negotiations break after Putin criticizes the Ukrainian president’s leadership credibility → target countries buying Russian oil such as China or India by prohibiting them from selling any products to US → impact on the oil market, especially when Russia is the third-biggest oil producer.
- The U.S. seeks control over Ukraine’s rare earth minerals, warning of “big problems” if no deal is signed (such as aid cuts until Ukraine complies).
- Threaten to bomb Iran and impose tariffs on countries buying Iranian oil or gas if they don’t agree on a nuclear program.
→ All of these are causing some disruption on the global oil market, potentially putting upward inflation pressures even further.
