Global growth weakens further with manufacturing-services split more pronounced
- The global growth outlook has weakened further during the past quarter, with the contrast between manufacturing and service activity becoming more pronounced. President Donald Trump’s tariff measures, though modified to a degree, continue to affect global trade volumes and business expectations adversely.
- In response to the widespread softening of manufacturing, central banks have reduced interest rates modestly where they have space to do so, for example the US Federal Reserve (Fed), or as in the case of the European Central Bank (ECB) there has been a re-start of asset purchases (quantitative easing) and new lending to banks, for example, targeted longer-term refinancing operations (TLTROs).
- At the same time the targeted consumer price inflation in many developed economies such as the US, the eurozone, and Japan remains well below the intended rate of 2%.