Weekly Global Economy Overview: September 512, 2025
(MENAFN- The Rio Times) The past week in the global economy underscored the widening contrasts between resilient growth drivers and persistent structural weaknesses.
From sticky U.S. inflation and cautious central banks in Europe to industrial softness in Asia and deteriorating external balances in Africa and Latin America, the data revealed a fragile but still moving global recovery.
United States: Inflation Stickiness, Consumer Fragility
The week's headline came from the U.S., where August consumer inflation surprised on the upside. Headline CPI rose 0.4% on the month, pushing annual inflation to 2.9%, while core inflation remained steady at 3.1%.
Producer prices softened, slipping 0.1% on the month, yet labor market signals were weaker, with initial jobless claims rising to 263,000.
University of Michigan surveys showed consumer sentiment sliding to 55.4, with five-year inflation expectations jumping to 3.9%, the highest in months.
Together, the numbers kept pressure on the Federal Reserve to balance inflation vigilance with mounting signs of household strain.
Europe: Cautious ECB, Mixed Growth and Inflation
In Europe, the ECB left rates unchanged at 2.15% for refinancing, with Christine Lagarde stressing inflation vigilance but acknowledging patchy growth.
Bond auctions in Italy and Germany reflected easing financing costs, while sentiment surveys across the bloc remained subdued, especially in France.
Inflation indicators showed stability: German CPI rose 2.2% annually, France remained near 0.9%, and Spain held at 2.7%.
Industrial activity varied: Germany's July output rose 1.3%, Italy's 0.9% year-on-year, and Spain 2.5%, while France contracted by 1.1%.
Overall, the eurozone delivered modest resilience but lacked momentum.
United Kingdom: Flat Growth, Rising Price Fears
The UK economy stalled in July, with monthly GDP flat despite services growth of 0.4%.
Industrial and manufacturing output declined, while the trade deficit widened above £22 billion.
Construction activity posted mild gains. Notably, inflation expectations rose to 3.6%, suggesting households remain uneasy about living costs despite modest real growth.
Asia: Japan Weakens, China's Credit Eases, India Steady
Asia's picture was split. Japan reported a sharp 1.2% drop in July industrial output and declining capacity utilization, though business sentiment improved in the September Tankan survey and producer prices rose 2.7% annually.
China showed tentative stabilization, with ¥590 billion in new loans issued in August and total social financing surging past ¥2.5 trillion, while M2 growth held at 8.8%.
India's consumer inflation rose to 2.1%, still low by historical standards, while FX reserves climbed to $698 billion, reinforcing external strength.
Emerging Markets: South Africa, Brazil, Mexico
South Africa faced rising vulnerabilities. The Q2 current account deficit widened to 1.1% of GDP, gold output slipped, and July manufacturing contracted.
Mining was a bright spot, with production up 4.4% year-on-year. Brazil showed modest resilience: retail sales rose 1% annually, inflation eased slightly to 5.1%, and the service sector expanded 2.8%.
Mexico posted one of the week's weakest results, with industrial production plunging 2.7% year-on-year in July, underscoring demand weakness at home and abroad.
Commodities, Energy, and Positioning
Energy markets stayed volatile. U.S. crude inventories rose unexpectedly by nearly 4 million barrels, while speculative positioning data showed reduced bullish bets on oil but stronger long holdings in gold.
Agricultural futures saw mixed adjustments, with net shorts in corn and wheat widening.
A Week of Divergence
Taken together, September 5–12 revealed a global economy divided into three camps.
The U.S. and UK wrestled with sticky inflation and fragile consumer sentiment, Europe delivered patchy but stable data under a cautious ECB, and Asia balanced Japanese industrial weakness against China's credit easing and India's steady expansion.
Emerging markets highlighted vulnerabilities, from South Africa's widening deficits to Mexico's sharp industrial slump, with Brazil standing out as moderately resilient.
The overarching theme was one of divergence: growth is still present but fragile, inflation risks remain, and policy space is narrowing.
The week confirmed that the global recovery is alive but increasingly unbalanced.
From sticky U.S. inflation and cautious central banks in Europe to industrial softness in Asia and deteriorating external balances in Africa and Latin America, the data revealed a fragile but still moving global recovery.
United States: Inflation Stickiness, Consumer Fragility
The week's headline came from the U.S., where August consumer inflation surprised on the upside. Headline CPI rose 0.4% on the month, pushing annual inflation to 2.9%, while core inflation remained steady at 3.1%.
Producer prices softened, slipping 0.1% on the month, yet labor market signals were weaker, with initial jobless claims rising to 263,000.
University of Michigan surveys showed consumer sentiment sliding to 55.4, with five-year inflation expectations jumping to 3.9%, the highest in months.
Together, the numbers kept pressure on the Federal Reserve to balance inflation vigilance with mounting signs of household strain.
Europe: Cautious ECB, Mixed Growth and Inflation
In Europe, the ECB left rates unchanged at 2.15% for refinancing, with Christine Lagarde stressing inflation vigilance but acknowledging patchy growth.
Bond auctions in Italy and Germany reflected easing financing costs, while sentiment surveys across the bloc remained subdued, especially in France.
Inflation indicators showed stability: German CPI rose 2.2% annually, France remained near 0.9%, and Spain held at 2.7%.
Industrial activity varied: Germany's July output rose 1.3%, Italy's 0.9% year-on-year, and Spain 2.5%, while France contracted by 1.1%.
Overall, the eurozone delivered modest resilience but lacked momentum.
United Kingdom: Flat Growth, Rising Price Fears
The UK economy stalled in July, with monthly GDP flat despite services growth of 0.4%.
Industrial and manufacturing output declined, while the trade deficit widened above £22 billion.
Construction activity posted mild gains. Notably, inflation expectations rose to 3.6%, suggesting households remain uneasy about living costs despite modest real growth.
Asia: Japan Weakens, China's Credit Eases, India Steady
Asia's picture was split. Japan reported a sharp 1.2% drop in July industrial output and declining capacity utilization, though business sentiment improved in the September Tankan survey and producer prices rose 2.7% annually.
China showed tentative stabilization, with ¥590 billion in new loans issued in August and total social financing surging past ¥2.5 trillion, while M2 growth held at 8.8%.
India's consumer inflation rose to 2.1%, still low by historical standards, while FX reserves climbed to $698 billion, reinforcing external strength.
Emerging Markets: South Africa, Brazil, Mexico
South Africa faced rising vulnerabilities. The Q2 current account deficit widened to 1.1% of GDP, gold output slipped, and July manufacturing contracted.
Mining was a bright spot, with production up 4.4% year-on-year. Brazil showed modest resilience: retail sales rose 1% annually, inflation eased slightly to 5.1%, and the service sector expanded 2.8%.
Mexico posted one of the week's weakest results, with industrial production plunging 2.7% year-on-year in July, underscoring demand weakness at home and abroad.
Commodities, Energy, and Positioning
Energy markets stayed volatile. U.S. crude inventories rose unexpectedly by nearly 4 million barrels, while speculative positioning data showed reduced bullish bets on oil but stronger long holdings in gold.
Agricultural futures saw mixed adjustments, with net shorts in corn and wheat widening.
A Week of Divergence
Taken together, September 5–12 revealed a global economy divided into three camps.
The U.S. and UK wrestled with sticky inflation and fragile consumer sentiment, Europe delivered patchy but stable data under a cautious ECB, and Asia balanced Japanese industrial weakness against China's credit easing and India's steady expansion.
Emerging markets highlighted vulnerabilities, from South Africa's widening deficits to Mexico's sharp industrial slump, with Brazil standing out as moderately resilient.
The overarching theme was one of divergence: growth is still present but fragile, inflation risks remain, and policy space is narrowing.
The week confirmed that the global recovery is alive but increasingly unbalanced.
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