Economy Spotlight: The Most Important Events and What's Coming 6–12/1/2025

Introduction:

A very important week awaits various global markets with the start of the year 2025 and the return of many of them to trading after the end-of-year holidays. In the “Economy Spotlight” report, we will highlight the most important news and data issued by the major economies, and the important indicators that the markets await during the current week.

Economy Spotlight. Major Economies:

First. The US Economy:

Many analysts have begun to assess the US economic situation for the coming year under US President Donald Trump; some experts have said that America enjoys very strong economic momentum, which was indicated by Bank of America analysts.

This is when analysts attributed this optimism to the economic growth that America was able to maintain over the past two years at 3%, driven by low inflation and accelerating labor productivity compared to the decline in other global productivity measures, specifically China, Japan and Europe.

As for fears of potential tariffs by Trump, many analysts said that the markets have priced them in, and that the US economy may grow by 2-2.5% in 2025.

The US manufacturing purchasing managers index reinforced the optimistic view of the US economy, after it rose to its highest level in nine months, with production recovering and new orders rising further, but expectations remain uncertain amid the threat of higher tariffs that may raise the prices of imported raw materials.

As for the most prominent news related to the American markets, it was related to the Japanese Nippon Company’s acquisition of the American company US Steel One, which President Joe Biden decided to prevent due to concerns related to national security. The US Department of Justice also asked the Supreme Court late last weekend to reject President-elect Donald Trump’s request to postpone the implementation of a law that would ban the popular social media application TikTok or force its sale by January 19.

As for the most important economic indicators issued by the American side last week, they were as follows:

• The unemployment claims rate fell to its lowest levels since April 2024, when it fell to 211,000 applications compared to the previous reading that had recorded 220,000 applications.
• The reading of the manufacturing purchasing managers’ index fell from 49.7 to 49.4, but it was better than expectations of a decline to 48.3.
• The deficit in the weekly US crude oil inventory decreased to about 1.178 million barrels, down from the previous deficit that recorded 4.237 million barrels.
• The US manufacturing purchasing managers' index issued by the Institute for Supply Management rose from 48.4 to 49.3, which is the highest level in nine months, but remains below the standard point of 50, which is a measure between contraction and recovery. 

Second. European Economy:

Unlike the US economy, the European economy has suffered from many disturbances during 2024, particularly in France and Germany.

As analyses indicate, French German political stability is of paramount importance for the European Union’s economic outlook in 2025.

Despite the reassurances of the European Central Bank Governor Christine Lagarde about the issue of continuing to reduce interest rates, this still depends largely on the upcoming inflation data, which has returned to rise above 2% levels after falling for two consecutive readings below it.

In addition, achieving economic growth in the European region is still in a state of uncertainty, especially with the continued challenges facing the state of local political uncertainty and global events, such as Trump’s threats of tariffs and the slowdown in China.

As for the bright side for the European Union countries, the Guardian newspaper pointed to a dramatic shift in the weakest countries economically, as the countries most affected by the debt crisis in the first decade of the twenty-first century outperformed other giant countries such as France and Germany.

Portugal, Ireland, Greece and Spain are among the eurozone countries forecast to grow by at least 2% in 2025, more than double the rates forecast for France and Germany by the OECD.

Third. Japanese Economy:

The Japanese economy experienced many events during the past year, the most important of which was the end of the negative interest policy that had continued with it for decades, specifically since 1999, after the currency fell to its lowest levels since 1990.

Despite all attempts to revive the Japanese economy, political conditions had dominated the internal economic situation in Japan, as some economic indicators still give some negative impressions, specifically industrial production.

With this turbulent economic data, the Japanese government expected economic growth of 1.2% for the fiscal year 2025, supported by strong consumer spending on the back of wage increases.

As for the most prominent economic indicators announced last week by the Japanese side, it was in terms of industrial purchasing managers for the month of December, which rose from 49 to 49.6, but remains below the standard point of 50, which is the dividing line between recovery and contraction.

Fourth. Chinese Economy:

China’s economy is still struggling to recover from stimulus packages and easing measures that officials have been rolling out since September last year.

A government survey showed on Tuesday that China’s manufacturing activity barely grew in December despite a rebound in services and construction, suggesting that policy stimulus is seeping into some sectors as the economy braces for new trade risks. The National Bureau of Statistics’ purchasing managers’ index (PMI) slowed to 50.1 in December from 50.3 the previous month, remaining above the 50 mark that separates growth from contraction but missing the median forecast of 50.3.

A record 3.4 million young Chinese are set to take the civil service exam this year, lured by the prospect of lifelong job security and benefits including subsidized housing amid a slowing private sector and high youth unemployment. The number of applicants, up more than 400,000 from last year and tripling since 2014, reflects a huge demand for stability from disillusioned Gen Z Chinese and a lack of attractive options in the private sector even as local governments struggle to pay wages due to the financial crisis. Despite the economic data, Xi has said China’s gross domestic product is expected to grow by about 5% in 2024, state media reported.

Economy Spotlight. What to expect next week:

Global markets will be waiting for the following economic data: