Despite rising geopolitical tensions, the global economy showed surprising resilience in early 2025, and inflation continued to normalise. However, by disrupting the post-WWII economic order, weaponising trade — even against long-standing allies —, constantly shifting policy direction, and undermining the confidence of both households and businesses, D. Trump’s economic strategy may ultimately weigh significantly on global activity.
China: Between Excess Savings and Trade War
Although growth remained solid at the start of the year, PMI surveys now point to a slowdown in both manufacturing and services. Youth unemployment — particularly among university graduates — remains high, and household confidence is weak. When asked how they plan to use their income, six in ten households say they prefer to save rather than consume or invest in real estate — a sharp increase compared to the previous decade. Deflationary pressures, therefore, remain persistent.
The real estate sector is still burdened by past overbuilding and has yet to recover. At the same time, widespread overcapacity across many industrial sectors continues to dampen corporate investment. As a result, China’s growth remains heavily reliant on the strength of its external trade.
