Mid-2025 Macro Watch: Inflation Surges, Trade Rewinds, Recovery Splinters

As we step into the second half of 2025, the world economy finds itself at an inflection point. Growth has shown an unexpected resilience, buoyed by household consumption, selective capital spending, and pockets of strength in Asia. Yet, behind the numbers, a more nuanced picture emerges one marked by slowing momentum in the United States, a tentative rebound in Asia, and persistent policy uncertainty fueled by geopolitics. Key macro signals from July highlight a world that is not in recession, but also not in clear expansion.

The global outlook is increasingly defined by divergence: Developed markets, led by the United States and parts of Europe, are slowing as high interest rates and trade uncertainty weigh on investment. Asian economies, notably Singapore and Japan, are showing resilience in specific sectors. China’s economy remains fragile, with weak industrial profits and a cautious policy stance. In aggregate, global growth is likely to hover just above trend, but policy risks, trade tensions, and uneven investment patterns suggest heightened volatility into year-end.