Japan

米国経済見通し 高まるスタグフレーションリスク

Daiwa Institute of Research | Local Language | AcademicThink | April 25, 2025 | UndeterminedEconomic Growth

On April 2, President Trump announced reciprocal tariffs and subsequently suspended the application of surcharges on countries other than China for 90 days on April 9. This decision is expected to somewhat mitigate the negative impact on the U.S. economy compared to previous expectations. However, the risk of stagflation, which threatens to depress economic growth while increasing inflation, remains significant.

Recent economic indicators have shown some resilience; March retail sales demonstrated solid growth alongside stable industrial production, particularly in manufacturing. Inflation indicators also show a decline in the headline Consumer Price Index (CPI) and a slowdown in the core CPI. Despite these positive signs, there is an anticipation of future decreases due to last-minute consumer spending and increased corporate orders. Concerns persist regarding sticky inflation, which may rise in line with expected inflation rates, maintaining the stagflation risk in the U.S. economy.

The Federal Reserve is currently adopting a wait-and-see approach amid concerns over renewed inflation, complicating swift monetary policy actions and heightening the risk of an economic downturn. While tax cuts could bolster the economy, there are apprehensions regarding potential fiscal deterioration, notably with rising 10-year U.S. Treasury yields. A reduction in the scale of tax cuts to manage fiscal risks could lessen their economic support. Therefore, mitigating the impact of additional tariffs and minimizing the need for extensive economic measures will be crucial for addressing risks to the U.S. economy and its financial stability.

NHK | English | News | April 25, 2025 | UndeterminedTrade Issues and Numbers

Finance ministers and central bank governors from the G20 economies have commenced a two-day meeting in Washington, with significant emphasis on presenting a united stance against President Trump's tariff policies. The meeting began on Wednesday, and participants are looking to engage in discussions related to the global economy and financial markets.

Japan is represented by Finance Minister Kato Katsunobu and Bank of Japan Governor Ueda Kazuo. A common perspective among G20 members is the belief that free trade promotes economic growth; however, there are increasing concerns that Trump's tariff measures could undermine this principle. Additionally, trade tensions between the US and China, the largest global economies, pose further challenges.

The meeting occurs amidst ongoing volatility in stock and foreign exchange markets. Kato is set to meet with US Treasury Secretary Scott Bessent on Thursday for talks centered around the tariffs and currency issues, particularly in light of Trump's dissatisfaction regarding the yen's depreciation against the dollar.

ＩＭＦ世界経済見通し－トランプ関税で世界成長率は3％割れに

NLI Research Institute | Local Language | AcademicThink | April 25, 2025 | UndeterminedTrade Issues and Numbers

On April 22, 2025, the International Monetary Fund (IMF) issued its World Economic Outlook (WEO), forecasting a decline in global growth due to the impact of tariffs implemented under President Trump's administration. Global real GDP growth is projected to fall to 2.8% year-on-year in 2025, a reduction from January's forecast of 3.3%. The 2026 growth estimate is also lowered to 3.0%. The IMF attributed these revisions directly to US tariff policies which have introduced increased uncertainty in the global economic landscape.

The IMF characterized the outlook as a "reference forecast" instead of a typical "baseline forecast" due to the significant policy shifts and growing global trade tensions. The research indicates that while tariff measures were considered up to early April 2025, they do not account for recent temporary suspensions of tariff increases. The effective tariff rate is expected to rise markedly in this forecast scenario, impacting both the US and Chinese economies negatively while presenting some potential for growth enhancement in other regions.

Regionally, developed countries are projected to experience diminished growth rates, with the US expected to drop from 2.7% to 1.8% in 2025 due to uncertainties and slowing consumption. Emerging and developing economies, particularly China and India, also saw downward revisions. The UK’s economic outlook weakened due to high inflation and tariff effects, while Mexico is forecasted to endure a negative growth rate in 2025. The IMF highlighted a generally risk-averse environment for the global economy, with a notable increase in the probabilities of recession and inflation exceeding forecasted levels.

The report details various downside and upside risks impacting the global economy, including trade policy uncertainties and potential for further conflicts, contrasted with opportunities such as next-generation trade agreements and advancements in AI. Pessimistic scenarios predict significant declines in world GDP, while optimistic outcomes suggest possible improvements under specific positive policy changes. The document concludes with a note on the anticipated increase in electricity demand triggered by AI developments, alongside concerns regarding climate impacts and social inequalities.