# Rising Trade Tensions and Growing Uncertainty Threaten Global Economy

- Link: https://www.thailand-business-news.com/economics/209359-global-economic-slowdown-threatened-by-escalating-trade-tensions-and-increased-uncertainty
- Published: 2025-04-20T19:27:22+07:00
- Author: News Desk

The global economy faces growing uncertainty as the U.S. and Eurozone show signs
of slowdown, while China intensifies efforts to revive weak domestic demand.

## Key takeaways

 * The U.S. and Eurozone economies are showing clear signs of slowing, raising fears
   of a potential recession.
 * China is ramping up stimulus to boost weak domestic consumption, but recovery
   remains uneven.
 * Global growth prospects hinge on policy responses, with rising trade tensions
   adding to uncertainty.

These divergent dynamics are reshaping global growth prospects and could have far-
reaching implications for trade and financial markets.

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## US Outlook: Policy on Hold Amid Rising Risks

The U.S. The Federal Reserve has kept its benchmark interest rate unchanged at 4.25—
4.50% amid growing signs of economic deceleration, including slowing job growth,
rising delinquency rates, and weakening consumer spending. 

The Fed also reduced its pace of quantitative tightening, signaling a more cautious
approach to monetary policy. 

Despite sticky core inflation now forecast at 2.8% for 2025 the central bank still
anticipates two rate cuts next year. Analysts at Krungsri Research expect the first
cut as early as mid-2025, with rates projected to end the year between 3.50–3.75%.

A sharp drop in the services PMI and a downshift in GDP forecasts underscore the
fragility of the U.S. recovery.

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## Eurozone: Fragile Recovery Amid Trade War Fears

In Europe, the economic picture remains bleak. Inflation is easing, with headline
CPI at 2.3% and core inflation at its lowest in nearly three years.

However, European Central Bank (ECB) President Christine Lagarde has warned that
rising global trade tensions could shave 0.3–0.5% off Eurozone GDP while adding 
upward pressure on prices. Sluggish services activity, weak consumer confidence,
and limited investment continue to weigh on the recovery. 

Although Germany’s new EUR 500 billion stimulus plan may support its own economy,
the broader Eurozone impact will be limited in the near term. The ECB is expected
to cut its key deposit rate to 2.00% by year-end, albeit cautiously.

## China: Turning Inward to Reignite Growth

Facing external headwinds and tepid domestic demand, China is preparing new stimulus
measures to revive private consumption, a cornerstone of its post-COVID growth strategy.

Retail sales and consumer confidence remain well below pre-pandemic levels, prompting
banks to slash consumer loan rates and the government to offer income support and
trade-in subsidies. 

While exports have shown recent strength posting 14% growth in February trade tensions
threaten future momentum. 

Authorities are now prioritizing internal demand, aiming to meet the 2025 GDP growth
target of 5%, though a full consumption recovery may take longer.

As the U.S. and Europe teeter on the edge of recession and China navigates its own
structural rebalancing, the global economy faces a delicate balancing act. 

The coming months will be pivotal in determining whether policy responses can contain
the risks or whether the world is headed for a broader slowdown.