Piraeus Bank, in its May 2025 analysis of Global Macroeconomic Trends, highlights that under current conditions, many foreign manufacturing companies operating in China are inevitably exploring ways and locations for partial relocation. This shift lays the groundwork for the creation of new production hubs and a potential redesign of the geopolitical map of global supply chains.
"The key question, of course, is to what extent global production can economically decouple from China and how quickly this can happen," the bank's analysts note. "In the U.S., heightened uncertainty—especially around trade policy—negatively affected economic activity in Q1. On a quarterly annualized basis, real GDP contracted by 0.3% (preliminary estimate, Q4 2024: 2.4%), primarily due to a significant surge in imports. Overall, growth momentum appears more subdued compared to early 2025, as most leading indicators are trending downward, inflation expectations are rising, and the strained fiscal outlook requires prudent management. However, headline inflation slowed further in April, nearing the Fed’s target, while labor market conditions remain relatively strong."
Eurozone Outlook
In the Eurozone, analysts at Piraeus Bank report that economic growth in Q1 2025 surprised on the upside, with quarterly growth at 0.3% (Q4 2024: 0.2%), although it remains modest. Inflation remains close to the ECB’s target, offering room for further policy rate cuts. Labor market conditions also remain favorable. Still, challenges persist, as evidenced by weakening leading indicators (business sentiment, consumer confidence) and the pressing need for a mutually acceptable trade agreement with the U.S. Furthermore, there is a high likelihood that exports lost from the U.S. market could be redirected to Europe, intensifying competition and squeezing corporate profit margins.
China’s Position
In China, recent data suggests that robust economic growth continues, albeit at a slightly slower pace. Nevertheless, the recent tariff increases imposed by the U.S.—even if moderate—are expected to negatively impact China’s growth prospects. Redirecting exports from the U.S. to other markets is no easy task, and domestic demand does not appear strong enough to absorb the excess supply.
