According to Piraeus Bank’s October report on Global Macroeconomic Trends, uncertainty in international markets has returned to a notable degree.
However, discussions are ongoing, and the U.S. President has expressed optimism that a common ground will eventually be found. At the same time, significant geopolitical developments are taking place, as—for the first time—there appears to be a glimmer of hope for peace in the Middle East, following the fragile truce agreed between Israel and Hamas, with the participation of countries from the wider region.
In the United States, the federal government shutdown that began on October 1st dominates the economic landscape, with the temporary suspension of economic data releases being an inevitable consequence.
The most recent economic data and leading indicators continue to show resilient growth, a slight increase in inflation (approaching 3%), but also a deterioration in labor market conditions. However, it is estimated that a large portion of the tariff-related impact has not yet been reflected in prices—something expected to unfold in the coming months. As acknowledged by the Chair of the Federal Reserve, this development will significantly complicate monetary policy decision-making, as keeping inflation near target requires relatively high interest rates, while worsening labor conditions point to the need for lower rates.
In the Eurozone, growth remains subdued and no substantial acceleration is expected during either the third or fourth quarter. On the other hand, the unemployment rate remains at historically low levels, supporting private consumption, while inflation is projected to hover around 2%, in line with the ECB’s target.
However, increased defense spending and population ageing are intensifying pressure on government budgets to cut expenditures—often unpopular ones—thus contributing to political instability. Within this context, the ECB’s cycle of interest rate cuts appears to have largely come to an end.
In China, despite recent data showing a slight slowdown in the pace of growth, the full-year target of "around 5%" for 2025 is expected to be met—barring unexpected developments. A key contributing factor appears to be the successful redirection of exports previously destined for the U.S. to other markets. However, boosting domestic demand and maintaining a stable relationship with the United States are seen as critical for sustaining strong medium-term growth.
