Indices Continue to Decline, Downside Pressure on the Global Economy Intensifies — Analysis of the CFLP-GPMI for April 2025
According to data released by the China Federation of Logistics & Purchasing (CFLP), the global manufacturing PMI for April 2025 was 49.1%, down 0.5 percentage points from the previous month, marking two consecutive months of month-on-month decline and two consecutive months below the 50% threshold. By region, the Americas manufacturing PMI remained below 49% for two straight months with three months of month-on-month decline; Asia’s manufacturing PMI fell from last month to right at the 50% threshold; Africa’s PMI declined and fell below 50%; Europe’s PMI edged up from the previous month, staying slightly above 48% for two consecutive months.
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Taking the composite index into account, the global manufacturing sector remained in contraction for two consecutive months in April 2025. By region, Asia alone hovered around the boom-bust line (50%), while other regions were in contraction. The Americas stayed in contraction for two months; Africa, after a brief uptick above 50% the previous month, slipped back into contraction; Europe remained in contraction with recovery momentum roughly unchanged from March.
The continued weakness in global manufacturing reflects mounting pressure on the world economy. U.S. tariff hikes have been a disruptive force, raising downside risks globally. Major international institutions have downgraded their outlooks for growth in the world economy and trade. The IMF’s latest World Economic Outlook cut the 2025 global growth forecast to 2.8%, 0.5 percentage points below the January projection. The WTO’s latest Global Trade Outlook and Statistics warns that, due to the shock of U.S. tariff policy, growth in global merchandise trade volume in 2025 could plunge to -0.2% from its prior long-run trend of nearly 3%.
Barring a proper resolution, the tariff issue is likely to have persistent, amplifying effects on the global economy. Trade growth would continue to slow, further dragging on economic growth. Countries worldwide will be forced to reconfigure industrial and supply chains and rebalance trade layouts to adapt to the new environment.
Amid major uncertainties for the global recovery, it is especially important to persist in doing the right things. On the basis of respect for equal rights, countries should steadfastly strengthen multilateral economic and trade cooperation, promote trade facilitation, and gradually mitigate the negative impact of U.S. tariff increases on the global economy.
Europe: Manufacturing Still in Contraction, PMI Edges Up
In April 2025, Europe’s manufacturing PMI was 48.4%, up 0.2 percentage points month-on-month, staying slightly above 48% for two consecutive months. By major economies, Sweden and Greece remained above 53%; Germany, the U.K., France, and Italy all rose to varying degrees from last month but remained below 50%.
The changes indicate that Europe’s manufacturing is still contracting. The U.S. tariff shock, compounded by geopolitical conflicts, has intensified the already fragile recovery’s downside pressures. The IMF now projects euro area growth at 0.8% in 2025, 0.2 percentage points lower than at the start of the year. The ECB also sees significantly higher downside risks. Recent EU data show that economic sentiment in April fell 1.4 points from March to 94.4 for the EU and 93.6 for the euro area. Inflation expectations have ticked up. According to Eurostat’s flash estimate, euro area CPI rose 2.2% y/y in April, broadly stable, while core CPI rose 2.7% y/y, 0.3 ppts higher than March and the highest in eight months; core CPI m/m was 1%. The rise in core inflation introduces new uncertainty for subsequent ECB policy. The ECB’s Survey of Professional Forecasters shows higher Q2 inflation expectations, mainly due to higher tariffs and defense-spending plans.
The Americas: Manufacturing Remains in Contraction, PMI Continues to Fall
In April 2025, the Americas manufacturing PMI was 48.4%, down 0.5 ppts from March, below 49% for two months, and down month-on-month for three months, indicating continued contraction. By country, the U.S. PMI remained below 50% with consecutive monthly declines; Brazil and Colombia were above 50%; Canada and Mexico were below 50%.
The ISM reported the U.S. manufacturing PMI at 48.7% in April, down 0.3 ppts m/m, down m/m for three months, and below 50% for two months. Sub-indices showed contraction on both supply and demand: production and new orders were below 48%; new export orders and imports fell notably, to below 45% and below 48% respectively, highlighting the significant impact of tariff hikes on trade. Surveyed firms widely reported clear impacts from U.S. tariff increases on strategy, demand planning, and margins.
Goldman Sachs and UBS both see higher U.S. recession risks in 2025. Markets are increasingly concerned about inflationary pressures from higher tariffs. University of Michigan April surveys show one-year inflation expectations rising to 6.5%, the highest since 1981. A Gallup poll found 89% of Americans believe tariffs may push up prices and raise living costs. Tariffs have also hurt confidence: the Conference Board reported consumer confidence fell for a fifth straight month in April to the lowest since the pandemic. A Reuters poll of 300+ economists found 92% believe tariff hikes have a negative impact on business confidence.
Africa: Manufacturing Falls Back into Contraction, PMI Below 50%
In April 2025, Africa’s manufacturing PMI was 49.5%, down 1.3 ppts, slipping back into contraction after a brief rise above 50% in March. By country, Nigeria remained relatively stable around 54%; South Africa was volatile, with PMI down 4 ppts m/m to below 45%, and below 50% for most of the year.
The data suggest weak stability and notable volatility in African manufacturing. Under the influence of U.S. tariff increases, trade-dependent African economies face greater uncertainty in their recoveries. The IMF lowered its 2025 growth forecast for Sub-Saharan Africa to 3.8%, down 0.4 ppts from January’s 4.2%. U.S. tariff policy will negatively affect industrial and supply chain upgrading in Africa, while spurring countries to leverage the AfCFTA to boost intra-African trade and investment and strengthen resilience against global trade frictions. Diversifying external trade is also a top priority to mitigate tariff risks.
Asia: Manufacturing Growth Slows, PMI Falls to 50%
In April 2025, Asia’s manufacturing PMI stood at 50%, down 1.3 ppts m/m. By country, China’s PMI fell below 50%; India was around 58%. Within ASEAN, Indonesia, Singapore, Thailand, Vietnam, and Myanmar all fell m/m and were below 50%; the Philippines remained above 50%. Japan and Korea moved in opposite directions m/m but both were below 50%.
The data show Asia’s manufacturing growth slowed, with the index dropping to the boom-bust threshold, amid U.S. tariff effects. The IMF lowered its 2025 Asia growth forecast to 3.9%, 0.5 ppts below the prior projection. Facing tariff headwinds, Asia’s developing economies should leverage domestic demand, press ahead with industrial upgrading, structural optimization, and innovation, and deepen regional integration to enhance supply-chain resilience against global uncertainties.
International Watch | U.S.–EU Tariff Talks Stalled; Europe Faces Multiple Pressures
Source: Xinhua — Reporters Kang Yi, Dan Weiyi, Zhang Zhaoqing
The current confrontational U.S. trade stance has slowed U.S.–EU tariff talks. Meanwhile, fragmentation of global trade, weak external demand, and uncertainty around U.S. tariff policy are dragging on the European economy, undermining an already fragile recovery.
Divergent Demands
Talks are being relaunched but remain uncertain. The EU is prepared to concede on purchases of U.S. LNG, weapons, and farm products, but will not accept U.S. demands to abolish VAT, weaken digital regulation and taxation, or lower food standards.
The U.S. continues to levy 25% tariffs on EU steel, aluminum, and automobiles, maintains a 10% “baseline tariff” on most other goods, and threatens new tariffs on pharmaceuticals, semiconductors, copper, timber, critical minerals, and aerospace components. In early May, the EU launched a public consultation on a retaliatory list worth nearly €100 billion in U.S. goods. It also plans to file a WTO case over “reciprocal tariffs” and automobile duties. The EU has stated that if talks fail to secure mutual outcomes and tariff removal by the U.S., it will retaliate.
Senior Commission trade official Sabine Weyand urged member states to stay calm and avoid rushing, warning that some U.S. tariffs may persist long-term, especially in steel and autos, which Washington seeks to reshore. Several EU trade ministers stressed that the recent U.S.–U.K. deal is not a template for the EU. Sweden’s minister Johan Forssell (note: Chinese text cites Benjamin Dossa; maintaining the source wording) said the EU “will not welcome such a deal,” and the U.S. should be prepared for EU countermeasures.
Key Industries at Risk
Policy uncertainty is hitting autos and pharmaceuticals—core European sectors. In 2024, pharma, autos, and machinery accounted for nearly half of EU exports to the U.S. In the short run, higher tariffs and elevated trade-war uncertainty have led many European automakers and machinery firms to face sales and investment losses, postponed expansions, and delayed orders.
Stellantis, Mercedes-Benz, and others withdrew earnings guidance. Firms warn that if barriers persist, operating profit, cash flow, and margins will be hit. Andrew Adair of the VDMA (German Engineering Federation) noted Germany’s industry seems to be hitting the pause button on U.S. investment due to policy volatility.
Pharma may be next in line for higher U.S. tariffs. On May 12, President Trump signed an executive order targeting 59%–90% price cuts for U.S. drugs. Nearly 30 pharma giants—AstraZeneca, Pfizer, Eli Lilly, etc.—jointly urged Commission President von der Leyen to support the sector against potential U.S. import tariffs, fearing offshoring and higher consumer prices or shortages. An EFPIA survey of 18 major firms suggests tariff threats could prompt R&D and production to shift from Europe to the U.S.—with €16.5 billion (10% of planned investment) possibly moving within three months, and over €100 billion over five years.
Recovery Momentum Eroded
Weak external demand and U.S. tariff uncertainty are weighing on confidence, fueling fears of fragmentation and a weaker outlook. Analysts warn that uncertainty can hurt investment and consumption more than tariffs themselves; even a favorable deal would still leave significant negative effects.
The European Commission’s Spring 2025 forecast downgraded growth: EU GDP +1.1% and euro area +0.9% in 2025; EU +1.5%, euro area +1.4% in 2026, all lower than prior projections. Executive VP Valdis Dombrovskis said U.S. tariffs significantly raise uncertainty; the EU must boost competitiveness, dismantle internal barriers, and rely more on domestic demand. Director-General Maarten Verwey noted surveys show worse household and business sentiment, risking lower consumption and delayed investment. Expanding and deepening trade partnerships is thus more important than ever to diversify and enhance resilience, and to keep Europe an attractive gateway.
Energy Dependence, Industrial Erosion, and Market Loss: Europe’s “Three-Front Ambush”
Source: China Daily — China Watch Institute
Against the backdrop of global economic restructuring, Europe’s passive U.S. policy stance and wavering China stance reflect weakened traditional strengths and a lack of strategic autonomy. Although Europe retains high-end manufacturing advantages, it faces three constraints—energy and technology dependence, lagging new business models, and market squeeze—along with rising populism and stalled integration. Turning to exclusive “small-club” groupings with the U.S. has not prevented industrial hollowing or political fragmentation. The article argues China should stay the course, seeking a competitive-cooperative balance with the EU to stabilize a turbulent world.
Historically, Europe prospered—and suffered—through cycles of globalization. Post-WWII, by cooperating within a U.S.-led order, Europe maintained a secondary center position with technological and market clout, at the cost of greater external dependence (security, technology, energy). As the U.S. pivoted to “America First” and weaponized interdependence, Europe felt renewed pain.
Recently, Europe has faced at least three dilemmas:
- Reliance on the U.S. for energy and frontier tech compresses profits and pushes industry outflows.
- In platform economy, AI, and other high value-added sectors—and even in lower value-added consumer and services—Europe is less competitive, with markets dominated by U.S. and Chinese firms.
- Traditional strengths face market share erosion—e.g., luxury hit by post-pandemic downshifting, EVs supplanting ICE vehicles in developing markets.
With Western Europe slowing and fiscal strains rising, anti-immigration and anti-globalization forces are gaining across the “central ring” of Europe. Italy and Belgium now have such parties in power; in Germany, France, Austria, and Portugal they are the largest opposition. Mainstream parties are pressured into policy concessions. EU integration stalls as Western Europe’s centripetal force weakens; CEE countries seek their own paths; Brexit set a separatist precedent.
While Europe doesn’t seek to quit globalization, it aims to reshape rules in its favor, forming “small-club multilateralism” with the U.S.: tighter internal cooperation with external coercive measures, shifting supply chains from far-shore to near-/friend-shore, constraining rivals—especially China. Yet conflicting interests and U.S. protectionism (tariffs, energy, agriculture) limit the EU’s leverage, pushing it to protect long-chain industries like autos despite costs. Simultaneously, the EU is crafting new tools outside WTO rules—higher green and human-rights bars, punitive moves to divert Chinese supply chains—to slow Chinese competition.
Overall, Europe’s passivity toward the U.S. and volatility toward China reflect external dependency and internal weakness. Whether its industrial base, technological stock, and political consensus can sustain its strategy remains uncertain. For China, rational engagement, openness, and green/tech innovation enhance resilience and broaden space for China–EU cooperation, potentially adding stability to the world economy.
Pressing Ahead Against Tariff Headwinds — An Assessment of the Current World Economy
By Xinhua reporter Yan Jie
From late July to mid-August, major economies released H1 data showing the world economy struggling under multiple challenges. On one hand, the U.S. tariff war has disrupted global trade, weakening growth momentum and becoming the largest risk source. On the other, cooperation to address challenges is gaining traction: many economies, including China, are optimizing structures, diversifying trade, and strengthening regional collaboration to build resilience.
Insufficient Momentum: Slower Growth in Advanced Economies
In H1 2025, frequent unilateral U.S. tariffs eroded global momentum. Divergence widened across regions, with advanced economies weaker than emerging and developing peers. In the U.S., tariffs raised risks: firms front-loaded imports, contributing to a q/q GDP contraction in Q1; Q2 growth partly reflected base effects as “rush imports” faded, while PCE—about 70% of GDP—grew only 1.4%, showing soft internal demand. The New York Times reported mounting strains: narrower job growth, tariff-driven inflation, and cooling consumption. A Yale Budget Lab report in early August estimated tariffs will lower U.S. real GDP growth by 0.5 ppts in 2025 and 2026.
The euro area grew 0.1% q/q in Q2, the lowest since early 2024. Germany and Italy saw export setbacks, dragging euro-area growth. Under the new U.S.–EU trade deal, most EU exports to the U.S. will face higher tariffs, while the EU must increase U.S. investment and energy purchases, eroding competitiveness and jobs and clouding the outlook.
Japan cut its FY2025 real GDP forecast from 1.2% to 0.7%, citing U.S. tariffs. A Kyodo survey shows only about one-third of large Japanese firms expect continued growth, far below 70% in January. Korea recorded negative growth in Q1, and the BOK sharply lowered its forecast amid weak domestic demand and tariff-hit exports.
The IMF July update warns that U.S. trade policy is adding persistent uncertainty; global activity remains fragile and distorted by tariff shocks, with policy uncertainty threatening stability this year and next. The APAC region shows resilience, with East and South Asia standing out as pillars of growth.
Headwinds: Tariffs Disrupt the Global Economy
Geopolitical tensions, tariff wars, volatile cross-border investment, supply-chain fragmentation, high global debt, and rising macro-financial risks all add instability. Many observers call U.S. tariffs the largest risk source for both the U.S. and world outlook. The Bank of England warned in July that escalating trade conflict due to U.S. tariffs brings extreme uncertainty. UNCTAD cautioned that tariff uncertainty is hindering trade and investment, damaging supply chains—especially for least-developed countries.
Tariffs also hurt the U.S. JPMorgan research finds that, contrary to claims that foreign producers bear the costs, U.S. firms face tens of billions in direct costs, forcing price hikes, layoffs, hiring freezes, or margin compression, with pressure passed to households. The Yale Budget Lab estimates average U.S. prices will rise 1.8% in the short term in 2025, costing households $2,400 on average. Swiss Re argues tariff uncertainty erodes confidence in U.S. governance and dulls capital inflows, while lower supply-chain efficiency may lift trend inflation. Major U.S. banks (Goldman Sachs, JPMorgan, Morgan Stanley) now forecast slower global growth by end-2025 due to tariff and geopolitical uncertainty.
Cooperative Development: The Global South as a Key Force
Under tariff shadows, nations are deepening cooperation to enhance competitiveness, diversify trade, and strengthen regional ties. The Global South is rising collectively, playing a more pivotal role in promoting a more inclusive globalization and upholding multilateral trade. ASEAN is leveraging RCEP to accelerate integration; African economies are advancing market integration to build a regional safety net. The IMF emphasizes pragmatic cooperation and reducing trade/investment barriers.
With developed-economy trade weakening, Global South markets—home to 70% of the world’s population—are thriving. Since 2000, developing-country goods trade has grown 4.6×, outpacing advanced economies, with their global share rising from 30% to 45%. Today the Global South accounts for over 40% of global GDP and 80% of global growth contribution, becoming a key driver. Oliver Wyman partner Pedro Bezeman (per source transliteration) notes supply chains are rebalancing toward the Global South, which is increasingly an export destination and demand source for Europe and the U.S.
As a member of the Global South, China’s economy grew 5.3% y/y in H1, demonstrating resilience and potential, driving high-quality development through innovation and providing a stabilizing force and attraction for shared opportunities. Despite protectionist headwinds, China’s policy mix continues to take effect, while major national expos (CIIE, Chain Expo, Consumer Expo, Fair for Trade in Services) are bolstering resilience and openness.
Recently, Morgan Stanley, Goldman Sachs, and UBS all raised their 2025 China growth forecasts. Invesco’s latest survey shows SWFs are increasingly keen on China to capture tech-driven opportunities.
“In an era of uncertainty, China’s stability and development mean confidence and opportunity,” said Huang Zhenlong, Chair of Malaysia’s Silk Road Friends Club. Whether through imports that lift regional exports, infrastructure connectivity, green energy transitions, or supply-chain coordination, China has become a key force for global sustainable development.
