Global Economy News
LAST UPDATE: June 3, 2025
European factory production stabilises further but Asia, US struggle with tariffs
European manufacturing showed signs of stabilization in May, while factory activity in Asia and the US continued to struggle due to tariffs and trade tensions.
Insight
The divergence in manufacturing performance highlights the varying impacts of global trade policies. Europe’s stabilization suggests resilience and adaptation to current economic conditions. In contrast, the US and Asia face challenges from ongoing tariffs, leading to decreased manufacturing activity and potential supply chain disruptions. These disparities may influence global trade dynamics, with Europe potentially gaining a competitive edge if current trends continue. Policymakers in affected regions may need to reassess trade strategies to mitigate negative impacts on their manufacturing sectors.
Behind OPEC+ oil output hike, Saudi-Russian tensions simmer
Tensions between OPEC+ powerhouses Saudi Arabia and Russia emerged during recent policy negotiations, as they disagreed over the pace of planned oil output increases.
Insight
During a pivotal meeting, Saudi Arabia advocated for a faster hike in production beyond the proposed 411,000 barrels per day (bpd), partly due to overproduction by members such as Kazakhstan and Iraq. In contrast, Russia, along with Oman and Algeria, argued for a pause in hikes, citing concerns about weak demand and limited market capacity to absorb additional supply. Ultimately, a compromise was reached to continue with the 411,000 bpd increase starting in July, matching levels from May and June. This decision is part of OPEC+’s broader strategy to gradually unwind production cuts implemented over the past five years. However, the group still retains nearly 4.5 million bpd in cuts, equivalent to about 4.5% of global demand. Saudi Arabia, with extensive spare capacity, is in a stronger position to boost output and gain market share, unlike Russia, which faces constraints due to sanctions and limited investment. Following the announcement, oil prices rose 3% to over $65 per barrel.
Trade barriers and plane delays challenge global airlines
The global airline industry is grappling with significant challenges due to rising trade tensions and severe aircraft delivery delays.
Insight
At the 2025 International Air Transport Association (IATA) annual meeting in New Delhi, Director General Willie Walsh warned that increasing trade barriers and isolationist policies are harming the economy and the aviation sector, undermining decades-old international agreements on tariff-free aircraft trade. The airline industry’s 2025 profit forecast has been downgraded due to declining consumer confidence and discretionary spending, particularly in the U.S. Meanwhile, as post-pandemic travel demand surges, aircraft delivery delays and supply chain disruptions are impeding airline expansion. Deliveries for 2025 are now expected to be 26% below earlier commitments, with ongoing issues potentially lasting through the decade. Walsh criticized the manufacturing sector and suggested legal action might be considered, though cooperation with manufacturers is preferred. On sustainability, Walsh denounced the insufficient production of sustainable aviation fuel (SAF) and reaffirmed the industry’s goal of achieving net-zero emissions by 2050. Despite these obstacles, airlines such as Air India continue to pursue ambitious expansion plans, engaging in negotiations for sizable aircraft orders from Airbus and Boeing.
