United States: Market Volatility Amid Trade Policy Shifts

The U.S. economy is experiencing fluctuations due to recent trade policy changes. President Trump’s announcement of sweeping tariffs in early April led to a significant stock market downturn, marking the largest decline since the 2020 crash. However, the subsequent postponement of a 50% tariff on European Union imports sparked a market rebound, with the Dow Jones Industrial Average rising by 740 points.

Consumer confidence has shown signs of recovery, increasing by 12.3 points in May, driven by improved income expectations and optimism following the U.S.-China trade agreement.

Despite these positive indicators, the U.S. economy contracted by 0.3% in the first quarter of 2025, primarily due to decreased government spending and increased imports.

United Kingdom: Growth Forecasts Amid Trade Challenges

The International Monetary Fund (IMF) has revised the UK’s economic growth forecast for 2025 to 1.2%, up from 1.1%, citing stronger-than-expected performance in the first quarter. However, the IMF warns that ongoing U.S. tariffs could reduce the UK’s GDP by 0.3% by next year, highlighting the potential impact of global trade tensions.

Chancellor Rachel Reeves has received praise for her fiscal strategies, particularly the infrastructure-focused October Budget, which aims to stimulate growth and productivity.

Israel: Economic Impact of Ongoing Conflict

Bank of Israel Governor Amir Yaron has indicated that the continuation of the Gaza conflict could reduce Israel’s projected economic growth for 2025 by 0.5 percentage points, lowering it to 3.0%. The conflict has significantly impacted the labor market due to the high number of reservists called into service. Inflation rose to 3.6% in April, exceeding the target range, but is expected to fall to 1.8% in the coming year.

India: Prospects of a U.S. Trade Agreement

India’s Finance Ministry has highlighted the potential benefits of a bilateral trade agreement with the United States. Such a deal could enhance market access and stimulate an increase in Indian exports, strengthening economic ties between the two countries and unlocking new avenues for trade and commerce.

Global Outlook: Cautious Optimism

While recent developments, such as the easing of U.S.-China trade tensions, have provided some relief to global markets, uncertainties remain. The IMF maintains its global real GDP growth forecasts for 2025 and 2026 at 2.2% and 2.4%, respectively, but notes that the unpredictability of trade policies could pose risks to these projections.