The global economy is starting to feel the heat, just weeks after US President Donald Trump took a tough stance on global trade. We’re now beginning to see the first signs of what that move might mean for the world’s financial future.
The International Monetary Fund (IMF), just a short walk from the White House, is expected to trim its global growth forecast. That update is coming on Tuesday, and it will likely reflect the early fallout of Trump’s sweeping tariffs announced on April 2.
On Wednesday, we’ll also get a clearer picture from across the globe. Manufacturing and services data from major economies like the US, Japan, and Europe will be released. These figures will offer us the first proper glimpse of how businesses are responding to the uncertainty.
Kristalina Georgieva, the IMF’s Managing Director, has already hinted at what’s coming. “There will be a clear markdown in growth,” she said. “But not a recession.” Inflation, on the other hand, is expected to tick up in some regions. She also warned that dragging out this uncertainty could cause stress in the financial markets.
Analysts at Bloomberg Economics added a word of caution. Historically, the IMF tends to underestimate the real impact of big global crises. So, even if their projections look mild now, things could end up worse than expected.
Despite the growing concern, key policymakers aren’t rushing into action. US Federal Reserve Chair Jerome Powell recently said the Fed will hold off on any major moves until things become clearer. Similarly, European Central Bank President Christine Lagarde admitted it’s still too soon to tell if the worst has passed.
As all this unfolds, global finance leaders are gathering in Washington. Georgieva hopes this week’s meetings, including a key G20 finance summit, can cool things down. “We need to build a stronger, more united global economy,” she said.
Key Developments Across the Globe
United States and Canada:
This week, investors in the US will keep an eye on consumer confidence and inflation expectations. The University of Michigan’s revised April report is due Friday. There’s also the Fed’s Beige Book on Wednesday, which shares feedback from businesses across the country.
Home sales data, durable goods orders, and speeches from Fed officials are also lined up. In Canada, the final days of the election campaign are underway. Polls suggest the Liberals are slightly ahead. Meanwhile, trade negotiator Steve Verheul will speak in Toronto about the country’s response to the US tariffs.
Asia:
China will kick off the week by announcing its loan prime rates on Monday, with no major changes expected. Indonesia’s trade figures and the Philippines’ balance of payments data will also give insight into how the region was doing before Trump’s tariffs.
Midweek, central banks in Indonesia and Japan are expected to hold steady on interest rates. India, Australia, and Japan will release manufacturing and services data that may show the first signs of impact from global trade stress.
South Korea’s trade minister is heading to Washington again, hoping to strike a better deal with the US. Japan, already in talks, may tweak its car safety rules to secure an agreement.
Europe, the Middle East, and Africa:
With a public holiday on Monday in many parts of Europe, much of the attention shifts to the US. But in the eurozone, surveys on business and consumer confidence will be closely watched.
The European Central Bank is set to release wage data, which may confirm a slowdown in pay rises. Germany’s Ifo business confidence report and similar indexes from France will round off the week.
In the UK, all eyes will be on Wednesday’s PMI report and public finance numbers, with retail sales data out on Friday.
Russia’s central bank will reveal its latest interest rate decision on Friday. Inflation has eased, but a rate cut is still not expected just yet.
Latin America:
Argentina, fresh from a $20 billion deal with the IMF, will release economic data showing whether it’s truly bouncing back. Colombia’s latest economic activity report is also due.
In Brazil, inflation is expected to stay above the central bank’s target range. Mexico, on the other hand, is edging toward a technical recession, with GDP and inflation reports scheduled this week.
