Charting The Global Economy: ECB Cuts Rates While Canada Holds

The European Central Bank and Bank of Canada opted for different policy responses to an escalating trade war, while both acknowledged growing risks to economic growth.

The ECB lowered interest rates for the seventh time since last June and officials underscored further headwinds to the bloc, prompting markets to boost bets on additional easing. Meantime, Canadian policymakers hit the pause button on their cutting cycle to assess the impact from US tariffs, which they said could cause a year-long recession.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, markets and geopolitics:

World

The World Trade Organization slashed its forecast for merchandise trade this year as soaring US tariffs and broader uncertainty hammer international commerce. The Geneva-based WTO expects the volume of world merchandise trade to decline by 0.2% in 2025 — almost three percentage points lower than it would have been without the trade war, marking a dramatic reversal from expectations at the start of the year.

In addition to decisions by the ECB and Bank of Canada, central bankers in South Korea, Botswana and Namibia kept interest rates unchanged. Egypt and Denmark lowered rates, while officials in Turkey boosted borrowing costs in a surprise move.

Europe

UK businesses shed workers at the fastest pace since the start of the pandemic shortly before they were hit by a £26 billion ($34.3 billion) rise in payroll taxes and US tariffs. Vacancies in the first quarter slipped below pre-pandemic levels for the first time since 2021.

Investor confidence in Germany's economy plummeted as Trump's on-off trade measures threaten to choke off a nascent recovery. The ZEW institute's expectations index fell to minus 14 in April from 51.6 the previous month.

US & Canada

The US economy is set to lose billions of dollars in revenue in 2025 from a pullback in foreign tourism and boycotts of American products, adding to a growing list of headwinds keeping recession risk elevated.

The gold that flooded into US futures exchange warehouses in a tariff-driven arbitrage trade is now slowly trickling out. The risk that precious metals could be caught up in trade duties pushed prices on New York's Comex into a large premium over global benchmarks in recent months. That created an incentive for traders to ship gold to the US to take advantage of the unusual price gap.

Bank executives' commentary over the past week made clear they're worried about where the economy is headed, but their first-quarter results showed little concern.

Asia

China has ordered its airlines not to take any further deliveries of Boeing Co. jets as part of the tit-for-tat trade war that's seen US President Donald Trump levy tariffs of as high as 145% on Chinese goods, according to people familiar with the matter.

China's exports rebounded in March ahead of the massive tariff hikes imposed against it by the US this month, with near-record shipments flowing to Southeast Asia. Exports in dollar terms far exceeded forecasts and soared 12.4% from a year earlier, the customs authority said. Exports to Vietnam and Thailand soared to records, while sales to the US grew more than 44% from February to exceed $40 billion last month.

President Xi Jinping's first overseas trip of the year was meant to showcase China's clout in the region. Now, Trump's tariff threats have turned it into a push to keep Southeast Asian leaders from cutting deals at Beijing's expense. Xi's visit also highlights the tricky position Southeast Asian nations face. They've become key routes for Chinese exports to reach the US since Trump's tariffs in his first term. Now, as they seek exemptions from the latest duties, they're also worried cheap Chinese goods could be redirected into their own markets.

Emerging Markets

Donald Trump is pulling his nation's closest neighbors into the center of his trade war with China as he seeks to elbow the Asian giant out of a region the US has long considered its own backyard. It's a diplomatic blitz aimed at blunting China's widening influence in Latin America, where it has become one of the principal providers of funding, a top trading partner, and an increasingly annoying thorn in Washington's side.

Trump's top Middle East envoy said the US will focus on restricting Iran's uranium enrichment and missile capability rather than dismantling its entire nuclear program. Steve Witkoff's suggestion that the US is ready to accept some enrichment would mark a significant diplomatic step. It goes against US and Israeli hardliners — who want to dismantle Iran's entire nuclear program — while reducing the urgency to restore United Nations Security Council sanctions, which demand that Iran suspend all enrichment-related activities.

Peru's economic growth slowed more than expected in February, as the government doubles down on its target of boosting economic output to its fastest pace in seven years. Peru's government is betting that the economy can grow 4% this year, which would be the highest rate since 2018. Economists are not convinced, however.