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Tariffs

European Central Bank Warns of Global Economic Uncertainty Amid Steady Growth

Strategic Insights

— 1 min read

The global economy is facing heightened uncertainty as it navigates trade tensions and substantial uncertainty, according to European Central Bank (ECB) president Christine Lagarde. Despite this, global growth has remained steady, driven in part by frontloading activity caused by tariff increases. The ECB chief noted that recent trade deals have helped to reduce uncertainty, but not remove it entirely. In the euro area, the economy has proven resilient at the start of the year, benefiting from the global frontloading and stronger private consumption and investment.

Key Takeaways:

  • The global economy is at a challenging juncture, with heightened uncertainty and trade tensions.
  • Despite this, global growth has remained broadly steady, driven by frontloading activity caused by tariff increases.
  • The International Monetary Fund found that global growth for the first quarter of 2025 was 0.3 percentage points higher than it had projected back in April.
  • The euro area economy has proven resilient at the start of the year, benefiting from the global frontloading and stronger private consumption and investment.
  • Sectors with significant export exposure to the United States, such as pharmaceuticals, recorded particularly strong output growth.
  • The expected slowdown in euro area growth was already evident in the second quarter of this year.
  • The unemployment rate in the euro area stood at 6.2 per cent in June, showing little change from the previous year.
  • The labour force continued to expand, with no significant change in the employment rate.

Statistics:

  • Global growth for the first quarter of 2025 was 0.3 percentage points higher than it had projected back in April.
  • The average tariff for US imports of euro area goods is now estimated to be between 12 per cent and 16 per cent.
  • The unemployment rate in the euro area stood at 6.2 per cent in June.
  • The pharma sector, which accounts for over one-fifth of euro area exports to the US, recorded particularly strong output growth.

Sources:

  • European Central Bank president Christine Lagarde, speaking at the International Business Council of the World Economic Forum in Geneva.
  • The International Monetary Fund.

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