In the third week of March, a confluence of weakening global trade indicators and persistent inflationary trends signaled increasing strain on major economies and central banks. Purchasing Managers’ Indices (PMIs) from key markets continued their downward trajectory, reflecting diminishing confidence in manufacturing and services sectors alike. Amidst these signs of deceleration, S&P Global downgraded its global GDP growth projection for 2025 to 2.5%, marking the lowest non-pandemic growth estimate since 2009. The revision was largely attributed to an uptick in tariff impositions and mounting policy unpredictability across trade-reliant economies.
The Organization for Economic Co-operation and Development (OECD) echoed these concerns, highlighting that inflation remains stubbornly high in several advanced economies. Price pressures, particularly in energy and essential goods, have proven more persistent than anticipated, delaying the normalization of monetary policy.
Central banks are navigating a precarious path. The Bank of England held its benchmark interest rate steady at 4.5%, with cautious messaging indicating a readiness to adjust policy as warranted by incoming data. Notably, one member of the monetary policy committee voted in favor of a rate cut, underscoring the institution’s internal divide and growing policy flexibility.
In contrast, the Bank of Canada moved preemptively, initiating a rate cut aimed at mitigating the domestic impact of global trade disruptions. This decision was seen as a signal of Canada’s intent to shield its economy from external shocks and maintain internal demand resilience.
Meanwhile, the energy sector presented a mixed picture. The International Energy Agency (IEA) reported that renewable energy expansion continued to curb the rise in global CO₂ emissions, despite the overall economic slowdown. Electricity demand remained robust, bolstered by industrial adaptation and residential needs. However, projections for fossil fuel consumption were adjusted downward, reflecting both weaker economic activity and accelerating energy transitions in major economies.
Financial markets responded with caution. Investors recalibrated their expectations regarding monetary easing, now forecasting only a single rate cut from the European Central Bank by the end of 2025. This shift highlights growing skepticism about the pace and depth of stimulus in the face of entrenched inflation and tepid growth.
For businesses and consumers, the current environment offers limited relief. Growth remains constrained, and uncertainty surrounding trade policies and monetary responses adds further complexity. Nonetheless, the continued commitment to renewable energy investments suggests that, despite near-term economic headwinds, long-term structural shifts in energy and climate policy remain firmly on track.
