Take Two: US economic growth slows; Eurozone inflation remains above target
- 03 March 2025 (3 min read)
What do you need to know?
The US economy expanded by 2.3% in the fourth quarter (Q4) on an annual basis, in line with the previous estimate but a slowdown from Q3’s 3.1%. Increased consumer and government spending was partly offset by a decrease in investment, official figures showed. Meanwhile, US President Donald Trump announced that delayed 25% tariffs on imports from Canada and Mexico would go into effect on 4 March, while he also threatened an additional 10% tariff on China. Trump also declared that a 25% tariff on European Union (EU) goods would be set out soon.
Around the world
Eurozone annual inflation was confirmed at 2.5% in January, up from December’s 2.4%, representing the bloc’s highest rate since July, as a sharp rise in energy costs increased price pressures. This marks the fourth rise in a row since inflation hit a three-year low of 1.7% last September and it has now been above the European Central Bank’s (ECB) 2% target for three consecutive months. Core inflation, which excludes more volatile food, energy, alcohol and tobacco prices, held steady at 2.7%. Elsewhere in Europe, Germany’s blue-chip DAX index rallied early last week following the country’s federal election which saw Friedrich Merz's conservatives win.
Figure in focus: 10%
Clean energy technologies including electric vehicles and batteries provided over 10% of China’s economic growth in 2024 for the first time ever, with sales and investments worth 13.6trn yuan ($1.9trn), according to an analysis by the Centre for Research on Energy and Clean Air. While clean energy grew three times faster than the overall economy, attracting 6.8trn yuan ($940bn) in investments, the growth rate for clean energy investments fell sharply to 7%, down from 40% in 2023, due to overcapacity. Meanwhile the United Nations biodiversity conference COP16 finally reached a funding agreement on the $200bn a year by 2030 aimed at supporting biodiversity conservation.
Words of wisdom
Clean Industrial Deal: A new European Commission roadmap for competitiveness and decarbonisation, focusing on both energy-intensive industries and the clean tech sector. Announced at last week’s European Industry Summit, the package is designed to support industries facing high costs and competition to secure Europe’s place in the global energy market. The deal will mobilise over €100bn to support clean manufacturing and to help finance the energy transition, and also aims to increase demand for clean products made in the EU. The initiative is part of a wider plan to boost the European economy and improve competitiveness alongside a focus on sustainability.
What's coming up?
On Monday, the Eurozone issues flash inflation data for February. On Tuesday Reserve Bank of Australia policy meeting minutes are issued – in February it cut rates for the first time since 2020. Australia also announces its Q4 GDP growth update on Wednesday, when composite Purchasing Managers’ Indices (covering manufacturing and services data) for Japan, the Eurozone, US, UK and China are published. On Thursday the ECB meets to set monetary policy - at its January meeting, policymakers cut the main deposit rate by 25 basis points to 2.75%. A third estimate of Eurozone Q4 GDP growth is announced on Friday.
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