Global Economy News

Published on May 12, 2025 | Prepared by Global Economist

Weekly Economist Summary (May 6–12, 2025)

Weekly Economist Summary (May 6–12, 2025)

Executive Summary

The second week of May 2025 marked an intensification of global economic fragmentation amid rising geopolitical rivalries, aggressive trade posturing, and monetary policy recalibration. From Trump’s tariff escalation to China’s financial innovation surge, and from sovereign debt pressures in Africa to the Vatican’s historic shift in leadership, markets navigated a complex tapestry of risk and realignment.

Key Themes:

U.S.–China trade conflict re-escalating
Strategic coordination deepening between China and Russia
Monetary tightening in emerging markets
Fragile debt dynamics in Africa
Shifts in global capital flows and investor behavior

1. Trump Says 80% China Tariff ‘Seems Right,’ Ahead of Trade Talks

Summary: On May 9, 2025, U.S. President Donald Trump stated that an 80% tariff on Chinese imports “seems right,” just days ahead of high-level trade talks scheduled in Geneva. The comment signals a potential rollback from the previously imposed 145% tariff, though Trump noted that the final decision would be left to Treasury Secretary Scott Bessent.

Trump’s remark came amid a heated trade war between the U.S. and China, in which both countries have imposed severe tariffs on each other’s goods—China maintaining a retaliatory 125% tariff. The U.S. administration also cited China’s failure to control the export of fentanyl as part of its justification for continued economic pressure.

Insights: Trump’s “80%” comment appears more tactical than definitive, potentially serving as a negotiating bluff to gain leverage ahead of the Geneva talks. Analysts believe the real tariff outcome may be closer to 50–60%.

China’ｓ Response: Beijing has remained cautious, emphasizing reciprocal fairness and suggesting that genuine trade normalization would require broader policy adjustments from the U.S. side beyond tariff figures.

URL：
Reuters: Trump says 80% tariff on Chinese goods ‘seems right’ ahead of trade talks

2. Trump Administration Addresses Financial Leaders at Milken Conference

Summary: At the 2025 Milken Institute Conference, U.S. Treasury Secretary Scott Bessent sought to reassure investors about the Trump administration’s economic policies, particularly concerning tariffs and trade relations. Despite these efforts, many financial leaders expressed skepticism about the administration’s strategies and their potential impact on the economy.(フィナンシャル・タイムズ, フィナンシャル・タイムズ)

Insights: The tension between the administration’s protectionist policies and the financial sector’s preference for free trade highlights the challenges in aligning political objectives with economic realities. Investor confidence remains fragile amid concerns over market stability and growth prospects.

URL：
Financial Times: ‘Grow up’: The Trump team’s message to Milken money men

3. Putin and Xi Strengthen Strategic Partnership Against U.S.-Led Order

Summary: Russian President Vladimir Putin and Chinese President Xi Jinping held talks emphasizing their commitment to a strategic partnership aimed at countering the U.S.-led international order. Discussions included military cooperation and energy projects, such as the Power of Siberia 2 gas pipeline.(Facebook, ブルームバーグ)

Insights: The deepening alliance between Russia and China represents a significant geopolitical shift, challenging existing global power structures. Their collaboration could lead to increased competition and tension with Western nations, particularly the United States.

URL：
Bloomberg: Putin and Xi Tout Partnership Aimed at US-Led Order in Talks

4. Russia and China Criticize U.S. ‘Iron Dome’ Missile Defense Plans

Summary: Russia and China have denounced U.S. President Donald Trump’s proposal to develop a missile defense system akin to Israel’s Iron Dome, labeling it as “deeply destabilizing.” They argue that such plans could trigger an arms race and militarize space.(The Moscow Times)

Insights: The criticism underscores the delicate balance of power and the potential for escalation in defense technologies. The U.S.’s missile defense initiatives may strain relations with other major powers and provoke countermeasures.

URL：
AFP via Barron’s: Russia, China denounce Trump’s ‘Iron Dome’ missile plans

5. U.S. Sanctions on Chinese Refiners Over Iranian Oil Imports

Summary: The U.S. has imposed sanctions on Chinese refiners for importing Iranian oil, aiming to cut off revenue streams to Iran. These sanctions have disrupted operations within China’s independent refining sector, leading to logistical challenges and financial constraints.(Reuters, Reuters)

Insights: The sanctions reflect the U.S.’s continued efforts to exert pressure on Iran through economic means. However, they also highlight the complexities of global trade and the unintended consequences that such measures can have on international markets and alliances.

URL：
Reuters: US sanctions on China refiners over Iran oil disrupt operations, sources say

6. OPEC April Oil Output Edges Lower Despite Plans for Hike

Summary: In April 2025, OPEC’s oil production slightly declined to 26.60 million barrels per day, down by 30,000 bpd from March, despite plans to increase output. The decrease was primarily due to a significant drop in Venezuelan supply, influenced by renewed U.S. efforts to curb its oil exports. Minor reductions in Iraq and Libya also contributed, while Iran recorded the largest output increase among member countries. Reuters+1Reuters+1

Insights: The production decline highlights the complexities within OPEC+ in meeting output targets amid geopolitical tensions and sanctions. Venezuela’s reduced supply underscores the impact of U.S. policies on global oil markets, while Iran’s increased output suggests resilience against sanctions.Reuters

URL：
Reuters: OPEC April oil output edges lower despite plans for hike, survey finds

7. Malawi Central Bank Keeps Key Rate High to Try to Curb Inflation

Summary: Malawi’s central bank has maintained a high key interest rate to combat persistent inflation. The decision reflects ongoing efforts to stabilize the economy amid challenges such as foreign exchange shortages and a significant budget deficit. Reuters

Insights: The central bank’s stance indicates a cautious approach to monetary policy, prioritizing inflation control over economic growth. However, sustained high-interest rates may hinder investment and consumption, potentially slowing economic recovery.

URL：
Reuters: Malawi central bank keeps key rate high to try to curb inflation

8. Rwanda Economy to Grow at Slower Pace in 2025, Finance Minister Says

Summary: Rwanda’s economy is projected to grow at a slower pace of 7.1% in 2025, down from previous estimates. The government plans to increase spending to 7.03 trillion francs ($5.01 billion) in the 2025/26 fiscal year to support growth and development initiatives. Reuters

Insights: While the projected growth remains robust, the slowdown signals potential challenges in sustaining high growth rates. Increased government spending aims to stimulate the economy, but careful fiscal management will be essential to maintain macroeconomic stability.

URL：
Reuters: Rwanda finance minister: economy to grow 7.1% in 2025

9. Fitch Says Gabon Averted Default, Regional Bond Swap Not Distressed Exchange

Summary: Fitch Ratings announced that Gabon successfully avoided a debt default by completing a swap of regional market bonds and treasury bills, which does not qualify as a distressed debt exchange. The bond swap, involving approximately 592 billion CFA francs ($1.03 billion), helps reduce the country’s repayment obligations for 2025 and 2026. Reuters+1Reuters+1

Insights: Gabon’s proactive debt management through the bond swap demonstrates a commitment to financial stability. However, the country’s CCC rating indicates ongoing fiscal vulnerabilities, and continued efforts are needed to improve creditworthiness and attract investment.

URL：
Reuters: Fitch says Gabon averted default, regional bond swap not distressed exchange

10. Mali Pressed to Pay ‘Enormous’ Debt for Regional Dam, Document Says

Summary: Mali faces pressure to repay over $94 million owed to the entity managing a regional dam that supplies power to Mali, Senegal, and Mauritania. The debt has become critical for the dam’s operations, with officials warning of severe consequences if payments are not made. Reuters+2Reuters+2Reuters+2

Insights: The situation underscores the importance of regional cooperation in infrastructure projects. Mali’s financial challenges threaten not only its own energy security but also that of neighboring countries, highlighting the need for collaborative solutions and financial support mechanisms.

URL：
Reuters: Mali pressed to pay ‘enormous’ debt for regional dam, document says

11. US Cuts mn Health Aid to Zambia Over Medicines Theft

Summary: The United States has reduced health aid to Zambia by $50 million following reports of theft and mismanagement of medical supplies. The decision reflects concerns over corruption and accountability in Zambia’s health sector.

Insights: The aid cut emphasizes the critical role of governance and transparency in maintaining international support. Zambia may need to implement stringent anti-corruption measures and improve oversight to restore donor confidence and ensure continued assistance.

URL：
AFP via Barron’s: US cuts $50mn health aid to Zambia over medicines theft

12. Moody’s Says Tariffs May Hit African Banks Through China Slowdown

Summary: Moody’s has warned that while U.S. import tariffs may not directly impact sub-Saharan African banks, they could face “second-round effects” from a slowdown in China’s economy. Reduced Chinese demand for African commodities could lower export volumes and prices, affecting trade-finance revenue for African banks. Reuters+2Reuters+2Reuters+2

Insights: The interconnectedness of global economies means that trade tensions between major powers can have ripple effects on developing regions. African banks may need to diversify their portfolios and strengthen risk management practices to mitigate potential impacts.

URL：
Reuters: Moody’s says tariffs may hit African banks through China slowdown

13. Asian Banks See Big Boost to Wealth Business as Currencies Rally

Summary: A sharp rally in Asian currencies is boosting demand for wealth and forex products, as clients seek alternatives to U.S. dollar-denominated assets and demand for hedging grows amid trade tariff uncertainties. Reuters+2Reuters+2Reuters+2

Insights: The appreciation of Asian currencies presents both opportunities and challenges for banks. While wealth management services may see increased demand, banks must also navigate the complexities of currency fluctuations and their effects on international trade and investment.

URL：
Reuters: Asian banks see big boost to wealth business as currencies rally

14. UK-India Trade Pact to Be Signed After Three Months, India Official Says

Summary: A bilateral trade deal between India and the United Kingdom is expected to be signed after three months and will take over a year to implement, according to an Indian government official. Reuters+1Reuters+1

Insights: The forthcoming trade pact signifies a strengthening of economic ties between the UK and India. The agreement could open new markets and opportunities for businesses in both countries, but careful negotiation and implementation will be crucial to maximize benefits.

URL：
Reuters: UK-India trade pact to be signed after three months, India official says

15. India Scraps Short-Term Investment, Concentration Limits for Foreign Investors in Corporate Debt

Summary: India’s central bank has decided to withdraw short-term investment and concentration limits for foreign portfolio investors (FPIs) in corporate debt securities, aiming to boost foreign inflows. Reuters

Insights: The policy change is likely to attract more foreign investment into India’s corporate debt market, providing companies with greater access to capital. However, regulators must ensure that increased foreign participation does not lead to market volatility or systemic risks.

URL：
Reuters: India scraps short-term investment, concentration limits for foreign investors in corporate debt

16. India to Put Forward Position on Pakistan’s Loans at Next IMF Board Meet

Summary: India’s executive director at the International Monetary Fund will present the country’s position regarding loans to Pakistan at the upcoming IMF board meeting, following recent military tensions between the two nations. Reuters

Insights: India’s involvement in IMF discussions about Pakistan’s loans reflects the geopolitical complexities influencing financial decisions. The situation underscores the need for international financial institutions to navigate political sensitivities while addressing economic concerns.

URL：
Reuters: India to put forward position on Pakistan’s loans at next IMF board meet

17. India Says It Thwarts Pakistan Drones, Missiles as Tensions Soar

Summary: India reported that it “neutralized” Pakistani drone and missile attacks targeting several military sites, marking an escalation in tensions between the two countries. ブルームバーグ

Insights: The incident highlights the fragile security situation in the region and the potential for rapid escalation. Continued diplomatic efforts and confidence-building measures are essential to prevent further deterioration of relations.

URL：
Bloomberg: India says it thwarts Pakistan drones, missiles as tensions soar

18. South Korean Presidential Frontrunner Says US Risks Isolation with Tariffs

Summary: South Korea’s presidential frontrunner stated that Seoul should not rush into a trade deal with the United States and called for a coordinated response with other countries to U.S. tariffs, arguing that Washington risks isolation with its policy. Reuters

Insights: The candidate’s stance reflects growing concerns about the impact of U.S. trade policies on global alliances. South Korea’s approach to balancing relations with the U.S. and other trading partners will be a critical issue in the upcoming election.

URL：
Reuters: South Korean presidential frontrunner says US risks isolation with tariffs

19. Thailand Bids to Join Alaska Gas Project Before US Tariff Talks

Summary: Thailand is interested in co-developing a massive gas pipeline project in Alaska, which would involve investments in gas exploration and infrastructure, ahead of upcoming tariff discussions with the United States. ブルームバーグ

Insights: Thailand’s proactive engagement in energy projects with the U.S. demonstrates a strategic effort to strengthen bilateral ties and secure energy resources. Participation in such projects may also provide leverage in trade negotiations.

URL：
Bloomberg: Thailand bids to join Alaska gas project before US tariff talks

20. Chinese Companies Line Up to Sell ‘Innovation Bonds’, Capitalizing on Beijing’s Technology Push

Summary: Chinese banks, brokerages, and private equity firms are initiating plans to sell “sci-tech innovation bonds,” following Beijing’s publication of detailed rules for a “technology board” in the bond market to fund innovation amid intensifying Sino-U.S. rivalry.

Insights: The move aligns with China’s broader strategy to bolster its technological capabilities and reduce reliance on foreign technology. By facilitating funding for innovation, China aims to enhance its competitiveness in key sectors.

URL：
Reuters: Chinese companies line up to sell ‘innovation bonds’, capitalizing on Beijing’s technology push