Global Economic Signals Explained

From late July to mid-August, major economies around the world released their first-half economic data, revealing that the global economy is struggling amid multiple challenges. On the one hand, the US tariff war has disrupted the global trade order, weakened global economic growth momentum, and become the biggest "risk source" dragging down the world economy. On the other hand, strengthening cooperation to address these challenges has become a consensus, with many economies focusing on optimizing their economic structures, promoting trade diversification, and strengthening regional cooperation to help the global economy develop greater resilience. Global economic growth is projected to be 3.0% and 3.1% in 2025 and 2026, respectively, an upward revision from the April 2025 World Economic Outlook forecast. This reflects the front-loading effect of imports and exports before tariffs are implemented, the reduction in effective tariff rates, improved financial conditions, and fiscal expansion in some major economies. Global inflation is expected to decline, but US inflation is expected to remain above target levels. Downside risks from potential higher tariffs, rising uncertainty, and geopolitical tensions persist. Restoring confidence and improving predictability and sustainability remain key policy priorities.

Interpreting Key Signals of the Global Economy: Weak Recovery, Strong Divergence, and Policy Game

Growth Trend: Slow but Resilient Growth with Structural Slowdown

The global economy is currently in a critical phase of "weak recovery + high divergence." Global economic growth is projected at 3.2% in 2025 (IMF forecast), slightly slower than the 3.3% in 2024, and will further decline to 3.1% in 2026. This growth rate is significantly lower than the pre-pandemic average of 3.2%, reflecting continued insufficient momentum in global economic growth.

Significant Regional Differentiation:

Developed Economies: US growth is projected at 2.0% in 2025, declining to 1.7% in 2026; Eurozone growth is projected at 1.3% in 2025 and 1.2% in 2026; Japan faces a struggle between declining high inflation and expectations of interest rate hikes.
Emerging Economies: Some Asian economies remain the main drivers of growth; India's growth is projected at 6.2% in 2025, China's at 4.6%; Brazil's at 2.0%, and Middle Eastern countries such as Saudi Arabia benefiting from regional cooperation.
Policy Theme: Resumption of Easing Cycle and Structural Reforms in Parallel

Major global economies are entering a new round of easing, but policy paths are diverging:

US Policy Mix:

Monetary Policy: The Fed restarted quantitative easing in December, while simultaneously cutting interest rates by 25 basis points.

Fiscal Policy: The "Big Beauty Act" expands debt levels, and investment in the artificial intelligence industry is encouraged.

Trade Policy: The tariff war continues, and global trade fragmentation intensifies.

China's Policy Mix:

Monetary Policy: Officially announced appropriate easing, with multiple cuts to reserve requirements and interest rates.

Fiscal Policy: Strict control over local government debt, issuance of special treasury bonds.

Industrial Policy: Investment Driven by New Energy and High-Tech Industries

Core Characteristics: As the core of the global industrial chain, China and the US share highly similar policies, leading to a global easing cycle. However, this easing is more of a counter-cyclical adjustment to address insufficient demand than an indication of economic overheating.

Risk Warning: Three Major Uncertainties

Trade Policy Risk: Uncertainty surrounding US tariff policy is at a historical high, potentially triggering a surge in global trade growth to 1.6% (UN forecast).
Financial Market Risk: Overvalued assets based on optimistic AI expectations may suddenly correct, leading to a continued rise in long-term bond yields.
Geopolitical Risk: Spillover effects from the Russia-Ukraine conflict and the Israeli-Palestinian conflict, putting pressure on the restructuring of global value chains.

Conclusion: Navigating the Gaps in Order

Current inflation, debt, geopolitical conflicts, and the noise of "decoupling and supply chain disruptions" are all inevitable growing pains during the global economic "operating system" transition. Downside risks to the global economy continue to dominate. Long-term policy uncertainty will suppress consumption and investment; further escalation of trade protectionist measures, including the use of non-tariff barriers, will have negative impacts such as suppressing investment, disrupting supply chains, and curbing productivity growth.

The winners of the future will no longer be the countries or companies that performed best in the old system, but those who can be the first to understand the underlying logic of the new system, the fastest to update their internal systems and understanding, and the courage to participate in writing the rules of the future economy.