- US: Inflation holds steady; FOMC minutes show support for gradual rate cuts amid a resilient US economy
- Hong Kong: Growth recovers to pre-pandemic levels but outlook remains gloomy, given China’s slowdown and corporate weakness
- Singapore: Resilient growth on the back of global tech and electronics upcycle; expect steady expansion in external-oriented sectors
- Taiwan: Export growth expected to decelerate but remain in expansionary mode in 2025; tariffs under Trump 2.0 to have significant impact
Related insights
US: “Trump Trade” buoys consumer confidence. US inflation data met expectations; October’s PCE headline and core inflation were unchanged at 0.2% m/m and 0.3% respectively, at the same level as a month ago. The futures market increased the probability (66.5% vs 52.3% a week ago) of the Fed lowering rates by 25 bps to 4.00-4.25% at its Federal Open Market Committee (FOMC) meeting on 18 Dec. The FOMC minutes for the 6-7 Nov meeting showed broader support for a gradual pace of rate cuts because of greater uncertainty over the neutral rate amid a resilient US economy. Another reading below 200k for initial jobless claims should ease the Fed’s worries over the labour market weakness that drove the 50 bps cut in September.
The US Conference Board’s consumer confidence index improved a second month to 111.7 in November, its highest reading since Jul 2023, most likely driven by the “Trump Trade”. Besides becoming more optimistic about future job availability, consumers expected their financial situation to improve in six months. The perceived likelihood of a US recession over the next 12 months fell to a new low in November with a record 56.4% of the respondents expecting US equities to rise over the year ahead. The Board also asked a special question about 2025, in which consumers overwhelmingly cited higher prices as their top worry and lower prices as their top wish.
Ironically, Trump’s vow to impose harsh tariffs on America’s top three trading partners—25% on all goods from Mexico and Canada and an additional 10% on Chinese imports—have added to inflation concerns. Minneapolis Fed President Neel Kashkari was worried that a tit-for-tat tariff war would reignite inflation, while Mexican President Claudia Sheinbaum threatened to respond with retaliatory tariffs. In 2023, America imported USD475bn, USD418bn, and USD427bn of goods from Mexico, Canada, and China respectively—these three countries accounted for more than 40-45% of the US’ total imports. With 80% of Mexico’s exports and 75% of Canada’s exports heading to the US, the tariffs would also hurt the economies of America’s neighbours.
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