Global economy in the earthquake

Moody’s Analysis Company (belonging to Moody’s Financial Service Group) has just sent Adolescent New report on the world economic situation.

Harder and harder

According to Moody’s analysis, the global economy is in a serious precarious stage. The United States has surpassed its allies over the past 3 years, but the country’s economy has appeared cracks. Europe is still trapped in stagnation, significantly affected by capacity issues, decline in production and deep instability in structure. At the same time, his economy is particularly weak.

China is close to achieving the growth target set by 2024 (reaching 4.8% while the target is 5%) but domestic demand is still in a gloomy state, putting pressure on the country’s economy. Japan, Canada and Australia, each country is facing its own limitations. India and emerging economies outside China are being able to show better, but these countries of course cannot stand beyond the instability of the global economy.

Meanwhile, just a few weeks after taking office of the US President, Donald Trump took a series of tariff measures against both allies and rivals. The US increasing tax twice with a total of 20% for Chinese goods is only the beginning of Thuong Chien. The White House also applied 25% evenly for steel and aluminum of all countries. Not to mention, the Trump administration is considering increasing taxes on copper and wood products, considering new tax rates for EU goods and allies in Asia. That made Thuong Chien really explode, not a potential risk.

Many consequences

The above development caused a market break, some recent surveys showed that the expectation of the business world was decreasing, the consumption slowed down and the retail market as well as the US labor market were difficult. Even the true American GDP can decrease in the first quarter of this year.

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

Over the past two years, US inflation has decreased but this positive development is facing challenges. US inflation has risen again. At the same time, other economies also face the situation of food and energy costs increasing, the currency value decreases, causing difficulties for people. This situation is evident in Japan, where inflation in January 2025 is up to 4% compared to the same period in 2024.

The negative inflation painting can cause central banks to limit the loosening monetary policy. The US Federal Reserve (Fed) is delaying the cutting interest rates to evaluate the development, especially when inflation is showing signs of rising again because of the tariff policy, warrior and the government to reduce spending. When the Fed is more cautious, it will lead to the loosening of the global currency that will take place slower than expected.

However, according to the report on the expectation that other central banks may not be completely affected by the Fed policy. The central bank (ECB) and the Central Bank of the UK may continue to cut interest rates until the end of the 3rd quarter of 2025.

Commenting on the Chinese economy, Moody’s analyzing company assessed that the government set the growth target of about 5% this year is consistent with the ambition and results of 2024. However, if 2024 export becomes an important factor to close the growth target, this pillar will be very difficult in 2025 because of the impact of Thuong Chien.

In addition, the report also pointed out some other challenges of the global economy, such as the Ukrainian conflict that is still unpredictable to significantly affect the global energy market, or political fluctuations in Europe also have a significant impact.