
Will Southeast Asian nations pick sides between the US and China?
They've long been hedging their bets.
But Southeast Asian nations are caught in the dispute between the United States and China.
The trade-dependent countries are under threat from Trump's tariffs, too.
They face a delicate balancing act between economic survival and strategic neutrality.
The message was clear at the Association of Southeast Asian Nations – ASEAN's recent summit in the Malaysian capital Kuala Lumpur.
Member countries are recalibrating their economic partnerships to insulate their economies.
That includes a push to deepen trade ties with China and Gulf countries.
Why is the price of Japanese rice rocketing?
Plus, should older people work longer?
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Qatar Tribune
an hour ago
- Qatar Tribune
Eurozone inflation slows to 1.9% in May, below ECB target
Agencies Eurozone inflation eased in May to its lowest level in eight months, official data showed on Tuesday, falling back below the target of 2% set by the European Central Bank (ECB), further raising expectations for another interest rate cut this week. Year-over-year consumer price increases in the single currency area slowed more than predicted by analysts for FactSet to 1.9%, down from 2.2% in April, the EU's official statistics agency said. Core inflation, which strips out volatile energy, food, alcohol and tobacco prices and is a key indicator for the ECB, also eased more than expected to 2.3% in May, down from 2.7% a month earlier. The ECB is expected to deliver its seventh-straight interest rate cut Thursday as the United States' volatile trade policies hang over the sluggish eurozone economy. 'This won't have much of a bearing on Thursday's ECB decision, which already looked almost certain to be a 25 basis point cut,' said Jack Allen-Reynolds, deputy chief eurozone economist at U.K.-based investment research group Capital Economics. 'But May's inflation data strengthens the case for another cut at the following meeting in July,' he said. Eurozone inflation is at its lowest point since September last year, when it stood at 1.7%. The slowdown in inflation was thanks to prices for services easing to 3.2% from 4.0% in April, Eurostat said. The ECB closely monitors the sector as it is highly correlated to wage growth. The ECB fears that a vicious cycle between rising wages and prices would make it more difficult to tackle inflation. In energy, the rate was negative 3.6%, unchanged from the month before. Food-price inflation accelerated, however, to 3.3% last month from 3.0% in April. Inflation has sharply dropped from the record peak of 10.6% in October 2022 after Russia's invasion of Ukraine sent energy prices sky-high. Capital Economics' Allen-Reynolds said he expected inflation to fall further in the months ahead, 'leaving the headline rate comfortably below 2% in the second half of the year.' 'Subdued oil prices and a stronger euro will drag down energy inflation and lead to cheaper production inputs and imports. Decelerating wage growth will bring the long-awaited cooling in the sticky services category,' said Riccardo Marcelli Fabiani, senior economist at Oxford Economics. Consumer price rises in Europe's two economic powerhouses, Germany and France, slowed in May to 2.1% and 0.6%, respectively. While the eurozone economy expanded by 0.3% over the January-March period from the previous quarter, U.S. President Donald Trump's erratic trade policy, including the potential for steep tariffs, has hurt the region's economic outlook. Trump has put a 50% duty on EU goods on ice until July 9 as the two sides chase an agreement, but a 10% levy remains, alongside 25% tariffs on steel, aluminum and auto imports. Trump now also plans to raise duties on steel and aluminum to 50%.


Qatar Tribune
an hour ago
- Qatar Tribune
Global economy remains vulnerable to US tariffs
Agencies The global economy remains vulnerable to US tariff policy with the recent US court developments injecting a new layer of uncertainty. In effect, as long as tariff cases are in front of the courts, not much progress can be expected in terms of US trade negotiations with trading partners. In the US, irrespective of court developments, the administration is sticking with its plans to impose tariffs, utilizing, if need be, other routes. In the Euro-zone, the ECB is set to cut rates again while the EU's trade negotiations with the US will likely be very difficult. In the UK, despite positive deal-making with the US/EU/India, the outlook is shaky amid limited policy support and global trade uncertainty. In Japan, soaring bond yields further complicate the BoJ's job and bring the public finances to the limelight. Finally, despite the recent heightened China-US tensions, a resumption of the de-escalatory bias between them will not be surprising. Irrespective of how the current tariff-related legal developments will unfold, the US administration will likely stick with its plans to impose tariffs, utilizing, if need be, several other routes. However, until the courts' final say on the current cases is clear, President Trump's bargaining power in his ongoing negotiations with the US's key trading partners is weakened substantially. Importantly, this means that not much can be expected from the US's trade negotiations with its main trading partners as long as the cases are in front of the courts. And while policy uncertainty has already been very high since Trump took office, another layer of court-related legal uncertainty has now been added. Court developments aside, a key date is July 9, which is the date when the pause on the 'reciprocal' tariffs would end. Earlier, the US and China had diffused their trade war, but negotiations have since stalled, and tensions re-escalated recently. While further escalation following the 90-day window is possible, we think the more plausible scenario is that a de-escalatory bias will resume as the world's two largest economies got a feel of the enormous economic damage that will ensue from a full-blown trade war. Meanwhile, the House passed the GOP's 'Big, Beautiful Bill', which is a step in the wrong direction given that it worsens an already unsustainable debt trajectory, although it is positive for economic growth in the short term. The bill is now in front of the Senate, where it is expected to undergo some amendments although it will very likely remain a debt-increasing bill. Meanwhile, GDP contracted in Q1 on tariff front-running, but the labor market remains broadly resilient with three-month average job gains at 155K/month. Hence, the Fed will likely remain in a wait-and-see mode while markets are currently pricing-in around two 25 bps rate cuts by year-end. In our view, a US recession will be avoided on condition that a major tariff escalation does not get re-ignited. The prior tariff de-escalation drove a V-shaped rebound in the S&P 500 index although the US dollar index remains 10 percent below a recent high reached in January. The Euro-zone economy started the year on a good note, growing by a higher-than-expected 0.3 percent q/q in Q1, strengthening from 0.2 percent in the previous quarter. Meanwhile, headline inflation is almost at target, standing at 2.2 percent y/y although further progress is needed in terms of core and services inflation. Nevertheless, more recent indicators are starting to reflect the tariff-related headwinds with the PMI dropping below 50 (49.5 in May) for the first time this year. The ECB has carried on with its easing policy, cutting rates seven times since June 2024, and near certain to cut again in its meeting this week.


Qatar Tribune
an hour ago
- Qatar Tribune
OECD cuts global growth outlook to 2.9% for 2025 due to trade war
Agencies Global economic growth is expected to slow down to 2.9 percent, the OECD said on Tuesday, slashing its earlier forecast and warning that US President Donald Trump's tariffs blitz will stifle the world economy, hitting the United States especially hard. After 3.3 percent growth last year, the world economy is expected to expand by a 'modest' 2.9 percent in 2025 and 2026, according to the Paris-based Organisation for Economic Co-operation and Development (OECD). In its previous report in March, the OECD forecasted growth to be 3.1 percentfor 2025 and 3 percent for then, Trump has launched a wave of tariffs rattling financial markets.'The global outlook is becoming increasingly challenging,' said the OECD, an economic policy group of 38 mostly wealthy countries. It said 'substantial increases' in trade barriers, tighter financial conditions, weaker business and consumer confidence and heightened policy uncertainty will all have 'marked adverse effects on growth' if they persist. The OECD downgraded its 2025 growth forecast for the US from 2.2 percentto 1.6 percent. The world's biggest economy is expected to slow further next year to 1.5 percent Trump, who has insisted that the tariffs would spark a manufacturing revival and restore a US economic 'Golden Age,' posted on his Truth Social platform before the OECD report's publication: 'Because of Tariffs, our Economy is BOOMING!' The OECD holds a ministerial meeting in Paris on Tuesday and Wednesday, with US and EU trade negotiators expected to hold talks on the sidelines of the gathering after Trump threatened to hit the EU with 50 percent tariffs. The Group of Seven advanced economies is also holding a meeting focused on trade. 'For everyone, including the US, the best option is that countries sit down and get an agreement,' OECD chief economist Alvaro Pereira said in an interview with Agence France-Presse (AFP). 'Avoiding further trade fragmentation is absolutely key in the next few months and years,' Pereira said. Trump imposed a baseline tariff of 10% on imports from around the world in unveiled higher tariffs on dozens of countries but has paused them until July to allow time for negotiations. The US president has also imposed 25 percent tariffs on cars and plans to raise those on steel and aluminum to 50 percentas ofWednesday. US slowdown In the OECD report, Pereira warned that 'weakened economic prospects will be felt around the world, with almost no exception.' He added, 'Lower growth and less trade will hit incomes and slow job growth.' The outlook 'has deteriorated' in the US after the economy expanded by a robust 2.8% last year, the report said. The effective tariff rate on U.S. merchandise imports has gone from 2 percentin 2024 to 15.4 percent, the highest since 1938, the OECD said. The higher rate and policy uncertainty 'will dent household consumption and business investment growth,' the report said. The OECD also blamed 'high economic policy uncertainty, a significant slowdown in net immigration and a sizeable reduction in the federal workforce.' While annual inflation is expected to 'moderate' among the Group of 20 economies to 3.6 percentin 2025 and 3.2 percentin 2026, the US is 'an important exception.' US inflation is expected to accelerate to just under 4 percent by the end of the year, two times higher than the target for consumer price increases set by the Federal Reserve (Fed). The OECD also slightly reduced its growth forecast for China – which was hit with triple-digit tariffs that have been temporarily lowered – from 4.8 percent to 4.7 percent this year. Another country with a sizeable downgrade is Japan: The OECD cut the country's growth forecast from 1.1 percent to 0.7 percent. However, the outlook for the eurozone economy remains intact at 1 percent. Türkiye's economy, on the other hand, is estimated to expand by 2.9 percentin 2025 and 3.1 percent in 2026, which is also down from the previous estimate of 3.1 percent for this year and 3.9 percent for 2026. 'There is the risk that protectionism and trade policy uncertainty will increase even further and that additional trade barriers might be introduced,' Pereira wrote. 'According to our simulations, additional tariffs would further reduce global growth prospects and fuel inflation, dampening global growth even more,' he said.