Over in Shanghai, Chinese President Xi Jinping has called for action to adjust to changes in the international environment facing China – a nod to the US trade war. Xi also urged policymakers to grasp strategic priorities and making sound plans for the country’s economic and social development, according to state-run news service Xinhua. Xi made the remarks while chairing a symposium in Shanghai on economic and social development during the 15th five-year plan period from 2026 to 2030. Xinhua reported: The remarks came as China revs up efforts to fulfill the targets set in the 14th Five-Year Plan (2021-2025) in the final year of its implementation and to formulate the next five-year plan. Newsflash: growth has accelerated across the eurozone in the first quarter of this year. Eurozone GDP rose by 0.4% in the January-March quarter, twice as fast as the 0.2% growth recorded in October-December. Statistics body Eurostat reports that Ireland (+3.2%) recorded the highest increase compared to the previous quarter – that was flattered by the activity of multinationals based in the republic for tax reasons, followed Spain and Lithuania (both +0.6%). Hungary (-0.2%) was the only Member State that recorded a decrease compared to the previous quarter. Growth has surged in Taiwan, thanks to a scramble to buy its technology exports before new US tariffs came in. Taiwan’s GDP rose at an annualised rate of 9.67% in the first three months of this year, which indicates quarterly growth of almost 2.5%. Compared to a year ago, gross domestic product grew by 5.37%, the fastest rate since the first quarter of 2024. The GDP report says: Due to the strong demand for electronic information and communication products, real exports of goods and services grew by 20.11% (yoy). Imports also grew by 23.66% (yoy). Taiwan is a major producer of semiconductors, and has benefitted from the jump in demand for high-powered chips to support artificial intelligence systems. Germany has followed France’s lead, and returned to growth. The German economy grew by 0.2% in the first quarter of the year, new data shows, following a 0.2% contraction in the last three months of 2024. Germany’s Federal Statistical Office, Destatis, also reports that household final consumption expenditure and capital formation were both higher than in the previous quarter. However, Destatis also reports that GDP in the first quarter of 2025 was 0.4% lower than a year ago. Here’s the details: Gross domestic product (GDP), 1st quarter of 2025: 0.2% on the previous quarter (price, seasonally and calendar adjusted) -0.4% on the same quarter a year earlier (price adjusted) -0.2% on the same quarter a year earlier (price and calendar adjusted) The Italian economy grew by 0.3% in the first quarter from the previous three months, preliminary data shows. That’s slightly stronger than the 0.2% growth expected by economists. On a year-on-year basis, first quarter gross domestic product in the euro zone’s third largest economy was up 0.6%, national statistics bureau ISTAT said. ISTAT reports that agriculture, forestry and fishing and industry all grew, while services stagnated. As in France, inventory building added to GDP while trade made a negative contribution. Thailand’s central bank has cut interest rates, in a sign of concern that the US trade was could hurt its economy. The Bank of Thailand’s monetary policy committee voted 5-2 to reduce the one-day repurchase rate by a quarter of one percentage point, to 1.75%, the lowest level in two years. The central bank warned that the Thai economy is projected to expand at a slower pace than anticipated, with more downside risks due to uncertainty in major economies’ trade policies and a decline in the number of tourists. Announcing today’s decision, it explained: The U.S. trade policies and potential retaliations from major economies will cause significant changes in the global economic, financial, and trade landscape. This process is only beginning and subject to high uncertainties, with the global economy likely to grow at a slower pace. The situation is expected to be prolonged, leading to structural changes and lower efficiency in global trade and production. The unpredictable nature of future global trade policies of major economies continues to pose significant challenges in assessing the economic and inflation outlook going forward. The British sportscar maker Aston Martin is limiting imports to the US in the face of Donald Trump’s tariffs. Aston Martin, known for producing the cars driven by James Bond in the spy films, said it was “currently limiting imports to the US while leveraging the stock held by our US dealers”. The US is the key market for the lossmaking carmaker, which generated about a third of its £1.6bn revenue for 2024 in the country. It said on Wednesday it was “carefully monitoring the evolving US tariff situation” and would “respond to changes in the operating environment as they materialise”. Fellow carmakers Stellantis and Mercedes have withdrawn their financial guidance for the year this morning, blaming the uncertainty around changing US policy on import levies. Barclays bank has set aside more cash for bad debts due to worries over the US economy and a mounting global trade war. Its latest financial results show that Barclays has increased its provisions for loans expected to turn sour to £643m, up from £513m. This was largely due to £74m put by for “elevated US macroeconomic uncertainty”. Barclays says: The Group continues to monitor the heightened uncertainty in the near-term macroeconomic outlook, especially in the US. The bank also reported a 19% rise in pre-tax profits to £2.72bn for the three months to March 31. Finland’s economy has managed modest growth in the last quarter. Gross domestic product in Finland rose by 0.1% in January to March from the previous quarter, the country’s statistics office reported this morning. France’s economy is likely to “flirt with stagnation” throughout the year, despite the small rebound in GDP in the last quarter, predicts Dutch bank ING. Charlotte de Montpellier, ING’s senior economist for France and Switzerland, explains: The additional customs duties in the US and their direct and indirect impact will delay the French economy’s rebound. We estimate that the direct effect of a permanent 10% import duty in the US on French GDP (via a reduction in exports) will be around -0.1%. Adding to this are the effects of uncertainty, the global economic slowdown and more restrictive fiscal policy, all of which will weigh on French economic activity throughout the year. The cooling in the labour market is likely to limit the recovery in household consumption, and the savings rate is set to remain high. There’s better news from Austria, where the economy grew by 0.2% quarter-on-quarter during the first three months of 2025. That’s according to the Wifo institute, a Vienna-based think tank. It reports that industrial production rose by 0.6%, but there was a small contraction in services and in investments. Hungary is on the brink of recession after new data showed its economy contracted in the first three months of this year. Hungarian GDP fell by 0.2% in January-March, the country’s Central Statistical Office has reported, adding that “Industry and construction slowed the economic performance”. That’s a blow to prime minister Viktor Orban, as Bloomberg explains: Orban, who had pledged to voters that the economy would get off to a “flying start” this year after a recession in 2024, has had to walk back growth projections. Under pressure to kickstart growth, Orban has announced a series of pre-election tax cuts, including expanding personal income tax exemptions to mothers and value-added tax rebates to pensioners. These, in turn, have forced the government to scrap budget targets for this year and next. Donald Trump’s trade war has disrupted the diamond trade, according to producer Gem Diamonds this morning. Gem, which owns the Letšeng diamond mine in Lesotho and the Ghaghoo mine in Botswana, has told the City that its sale of large diamonds scheduled for the first quarter of this year was held over “because of US tariff uncertainty”. These goods are scheduled to be sold in the second quarter of 2025. This delay led to a 33% drop in Gem’s sales in the last quarter, to $21.6m. Economists are concerned that France’s economy remains weak, after it posted modest growth of 0.1% in the last quarter this morning. Bloomberg Economics says: “Business surveys suggest that this rebound in activity is already losing some momentum going into the second quarter. The services sector is still lagging while the manufacturing sector appears to be bracing for tariffs. We anticipate sluggish GDP growth of 0.1% in the second quarter, as tighter financial conditions and the impact of tariffs weigh on investment. Overall, our baseline forecast is for 2025 output growth is 0.5%.” Fund manager Mario Cavaggioni agrees that activity remains weak: Housebuilder Taylor Wimpey has reported that the spring selling season “has progressed as expected”, despite the macroeconomic volatility triggered by the US trade war. The company told shareholders that some customers are facing “ongoing affordability challenges”, particularly in the south of England (where prices are higher), but that it is still seeing good quality customer interest. Over the last year, Taylor Wimpey’s sales rate has run at 0.77 per outlet per week, up from 0.74 a year earlier, with a cancellation rate of 16% (up from 13%). Jennie Daly, chief executive, says: “The Spring selling season has progressed in line with expectations, with good levels of customer demand reflected in our sales rate. As a result, we are today reiterating our guidance for full year UK completions excluding JVs [joint ventures] and Group operating profit. Notwithstanding the wider macroeconomic backdrop, affordability is improving with lenders remaining committed to the housing market, albeit first time buyers continue to experience some challenges. Average UK house prices fell this month, lender Nationwide reports, after the rush to avoid an increase in stamp duty faded. According to Nationwide, house prices fell by 0.6% in April, with the average price dropping to £270,752 from £271,316 in March. Annual house price inflation fell to 3.4%, from 3.9% in March. Robert Gardner, Nationwide’s Chief Economist, says this “softening” of price growth was due to the changes to stamp duty at the start of the month, which lowered the threshold for paying the tax. Gardner adds: Early indications suggest there was a significant jump in transactions in March, with buyers bringing forward their purchases to avoid additional tax obligations. “The market is likely to remain a little soft in the coming months, following the pattern typically observed following the end of stamp duty holidays. Nevertheless, activity is likely to pick up steadily as summer progresses, despite wider economic uncertainties in the global economy, since underlying conditions for potential home buyers in the UK remain supportive. Factory activity across China contracted at the fastest pace in 16 months in April, a factory survey shows today, highlighting the economic impact from US President Donald Trump’s trade war. China’s official manufacturing purchasing managers’ index has dropped to 49, the weakest level since December 2023, down from 50.5 in March. Any reading below 50 indicates that the sector contracted. This indicates that the flurry of tit-for-tat tariffs imposed by Washington and Beijing this month have hurt manufacturers. Zichun Huang, China economist at Capital Economics, explains: “The sharp drop in the PMIs likely overstates the impact of tariffs due to negative sentiment effects, but it still suggests that China’s economy is coming under pressure as external demand cools.” “Although the government is stepping up fiscal support, this is unlikely to fully offset the drag, and we expect the economy to expand just 3.5% this year.” Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. It’s a massive day for GDP data, as growth figures from across the Eurozone – and then North America – are released through the day. They’ll give us an insight into how the world economy fared in the first quarter of this year, a time dominated by Donald Trump’s second presidency, and the trade war that sent ripples around the globe. And France has got us up and running, with new data showing that its economy has avoided falling into recession. French GDP rose by 0.1% in January-March, statistics body INSEE reports. That follows a 0.1% contraction in October-December 2024, and means France has avoided shrinking for two quarters in a row (a technical recession). But, such growth as there was came from a rise in inventories, as companies stocked up – perhaps in preparation for new tariffs. That added 0.5% to French GDP. INSEE reports that final domestic demand and household consumption both stalled. Investment, or “gross fixed capital formation”, shrank by 0.2%. Foreign trade kept contributing negatively to GDP growth in the first quarter (-0.4 points after -0.1 points): exports fell sharply this quarter (-0.7% after +0.2%), while imports rose again (+0.4% after +0.5%). We’ll hear from Germany, Italy, and the full eurozone this morning. This afternoon, investors will be bracing for the latest US GDP report which will show how America’s economy fared under Donald Trump, as recession fears rise…. The agenda 6.30am BST: France’s GDP report for Q1 2014 7am BST: Nationwide’s UK house price index for April 9am BST: Germany’s GDP report for Q1 2024 9am BST: Italy’s GDP report for Q1 2024 10am BST: Eurozone GDP report for Q1 2024 12pm BST: Mexico’s GDP report for Q1 2024 1.30pm BST: US GDP report for Q1 2024 1.30pm BST: Canada’s GDP report for February
Author: Graeme Wearden