Update on the Global Economy

Key Highlights :

China’s real GDP grew by 5% in 2024, in line with the government’s target.
Assessing the impact of the new US-China trade war, with President Trump’s 10% tariffs and China’s retaliation, is crucial.
India’s Union Budget announces consumption stimulus while continuing with fiscal consolidation.
Japan’s government interest payment burden is projected to increase by 50% in a 3-year period, as monetary policy is normalised.
Recent political turmoil in Korea does not pose significant near-term credit risks.

US PCE inflation picked up to 2.6% in Dec from 2.1% in Sep; 256K jobs were added in Dec, the highest in 9 months.
President Donald Trump signed some orders in his initial days in office including on immigration, citizenship, and energy sector.
President Trump initially imposed tariffs on Mexico, Canada, and China. However, tariffs on Mexico and Canada are now on hold.
Bank of Canada expects GDP growth to be 2.5 percentage points lower in the first year, in case of imposition of 25% tariffs by the US.
After Justin Trudeau’s resignation as Canada’s PM, the appointment of the next PM is crucial to navigate the Canada – US relationship.
Austerity measures in Argentina reduced inflation to 118% in Dec 2024 from peak of 289% in Apr.
While Brazilian real depreciated by a sharp 28% in 2024 due to concerns over fiscal management, there is some reprieve for the currency in 2025.

Germany sees a second year of contraction led by slump in domestic demand.
UK’s yields remain elevated amid overall economic uncertainties.
Turkiye’s central bank cut interest rates for the first time since May 2023 in response to falling inflation.

A recently published audit report in Mauritius has seen revisions in data for both growth and public sector debt.
Nigeria faces its highest inflation in nearly 30 years, though recently announced CPI adjustments may offer some relief.