Economy Spotlight: The Most Important Events and What's Coming 17-23/02/2025

Introduction:

Important events and indicators witnessed by various global economies last week, most notably the inflation indicators on the US side, which highlighted unpleasant surprises on various levels, in addition to other important indicators and events that we will highlight in this week’s report from the “Economy Spotlight” report. 

Also, we will review what awaits the markets during this week in terms of the major global economies, especially the extent of their great impact on US financial policies.

Economy Spotlight. Major Economies:

First. The US Economy:

The US economy is still witnessing a series of tariffs, which began last week to affect all imports of steel and aluminum from around the world, and then Trump's promises that April 2 would be the date for imposing tariffs on cars, which still raises the concerns of analysts and observers that this could lead to higher prices through higher production costs, especially since America is the largest importer of steel in the world.

Despite the reassuring statement by the Managing Director of the International Monetary Fund, Kristalina Georgieva, that it is too early to begin determining the extent of the impact of tariffs on the global economy, the President of the European Commission came out at the Munich Security Conference and indicated that the European Union will respond to any US tariff in kind.

The markets also awaited the testimony of the Chairman of the US Federal Reserve, Jerome Powell, before Congress, who confirmed that the Federal Reserve is in no hurry to reduce interest rates and that it is necessary to wait until the features of economic indicators, especially inflation and the labor market, become clearer. Following Powell's remarks, inflation data came in two days, confirming Powell's view that interest rates should not be cut too quickly, as all consumer price indices rose on an annual and monthly basis.

As for other economic indicators, they were as follows:

• The consumer price index rose on an annual basis from 2.9% to 3% and on a monthly basis from 0.4% to 0.5%, and the core index also rose on an annual basis from 3.2% to 3.3% and on a monthly basis from 0.2% to 0.4%.

• The producer price indices stabilized at 3.5% on an annual basis, while they fell from 0.5% to 0.4%.

• Crude oil inventories fell by almost half from 8.6 million barrels to about 4 million barrels for this week.

• Retail sales fell sharply from 0.7% to -0.9%, and core retail sales also fell from 0.7% to -0.4% for the month of January.

Second. European Economy:

The European economy began with news indicating that the European Commission would respond to US threats in a way that would not expose all parties to rushing into a destructive trade war for all parties.

However, European Commission President Ursula von der Leyen had threatened to respond to US tariffs in kind at the Munich Security Conference.

The New York Times pointed out the danger of US tariffs on the European economy, when it said that they could lead to a reduction in exports to the United States and weaken investment in Europe, which would deal a blow to growth at a time when the continent is suffering from a decline in its major economies, especially Germany and France.

While Oxford Economics said that the Eurozone is likely to be next in the tariff war, which was not ruled out by some White House officials.

As for economic indicators, some were issued last week, confirming the extent of the economic decline in the old continent, as industrial production fell to negative territory for the fourth month in a row, while the Eurozone's GDP stabilized at 0.9% for the fourth quarter of 2024.

Third. Japanese Economy:

The Japanese economy is still concerned about the issue of rising prices (inflation), as the Governor of the Bank of Japan, Kazuo Ueda, came out confirming that the central bank will manage monetary policy while taking into account all concerns surrounding prices, and that these increases will not be temporary and may continue until the middle of this year, which prompts the bank to shift monetary policy in a way that addresses the problems in the best way while taking into account all the surrounding risks.

Researchers affiliated with Japanese research companies indicated that Japanese economic growth did not grow well in the quarter ending in December of last year, especially in light of the slowdown in personal consumption due to the Japanese being affected by high prices more than rising wages, this comes a week before Japan announces its GDP.

Analysts also estimated that Japan's GDP will shrink in real terms in 2024 for the first time in four years, with the decline in personal spending being the main reason for this.

In response to President Trump's tariffs, Japan's Trade Minister Yuji Muto said on Wednesday that Japan had requested an exemption for its steel and aluminum products from the 25 percent tariffs imposed by US President Donald Trump.

Fourth. Chinese Economy:

The most prominent news related to the Chinese economy was the extent to which technology stocks have benefited, which have become more open to artificial intelligence, and even major industrial companies have become more open to Chinese technology, thanks to the DeepSeek application, which has increased confidence in China’s capabilities in this field. 

As for economic indicators, Chinese government data showed that foreign direct investment in China has declined by 99% over the past three years, due to the economic slowdown and anxiety.

Economy Spotlight. Economic Calendar and What to Expect in the Markets Next Week:

Global markets will be awaiting the following economic data: