Global growth resilience faces tariff tests
Key takeaways
US: Tariffs averaging 18% add stagflationary pressure by weighing on consumption, real income, and job growth, while inflation stays elevated but moderated by services disinflation. Powell’s Jackson Hole remarks shifted focus to growth risks, with markets now expecting a September rate cut and more accommodation ahead if the economy weakens.
Eurozone: Higher tariffs at ~15% will dampen growth into 2026, leaving domestic demand to carry the recovery as exports fade. Disinflation is ongoing, but sticky services and food inflation mean growth remains modest at around 1% with inflation converging toward target.
Emerging Markets: EMs maintain a growth premium with upgrades for China and India, while fiscal reforms and stimulus in BRICS cushion tariff impacts. Central banks show more independence from the Fed, but sustaining growth while managing stability risks will be the key challenge.
Global growth resilience faces tariff tests
Key takeaways
US: Tariffs averaging 18% add stagflationary pressure by weighing on consumption, real income, and job growth, while inflation stays elevated but moderated by services disinflation. Powell’s Jackson Hole remarks shifted focus to growth risks, with markets now expecting a September rate cut and more accommodation ahead if the economy weakens.
Eurozone: Higher tariffs at ~15% will dampen growth into 2026, leaving domestic demand to carry the recovery as exports fade. Disinflation is ongoing, but sticky services and food inflation mean growth remains modest at around 1% with inflation converging toward target.
Emerging Markets: EMs maintain a growth premium with upgrades for China and India, while fiscal reforms and stimulus in BRICS cushion tariff impacts. Central banks show more independence from the Fed, but sustaining growth while managing stability risks will be the key challenge.
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