United States (US)
The US economy showed increasing signs of moderation in March 2026, with diverging sectoral performance and rising inflationary pressures. The S&P Global US Manufacturing PMI remained resilient at 52.3, supported by solid domestic demand and inventory buildup, while the S&P Global US Services PMI fell to 49.8, marking its first contraction in over three years amid weaker new orders and declining business confidence. External demand remained subdued across both sectors, reflecting ongoing tariff pressures and geopolitical uncertainties.
Inflation rebounded sharply, with headline CPI rising to 3.3% (YoY), driven primarily by higher energy prices, while core inflation edged up more moderately to 2.6%, indicating relatively contained underlying pressures. The divergence between headline and core inflation highlights the significant role of external cost shocks, particularly from energy markets. Labor market conditions appeared stable on the surface but showed underlying softness. The unemployment rate declined slightly to 4.3%, largely due to falling labor force participation, while job creation remained uneven and underemployment increased. Amid these dynamics, the Federal Reserve maintained its policy rate at 3.50%–3.75%, signaling a cautious and data-dependent stance as it balances persistent inflation risks with signs of gradual economic cooling.
Euro Zone
The euro area economy showed a still-fragile expansion in March 2026, with activity remaining above the contraction threshold but losing momentum. S&P Global’s final data showed the Eurozone Composite PMI easing to 50.7 from 51.9 in February, indicating that overall output was still growing, but at a much slower pace. The slowdown was concentrated in services, where the Services PMI Business Activity Index fell to 50.2, while manufacturing continued to improve, with the Manufacturing PMI rising to 51.6, its highest level in 45 months. This divergence suggests that the euro area is no longer weakening uniformly, but growth is becoming narrow and less resilient.
At the same time, household sentiment remained soft. The European Commission’s flash estimate showed consumer confidence in the euro area falling to -16.3 in March 2026, indicating that households remained cautious and that the recovery in private consumption was still under pressure. This softer demand backdrop is consistent with the broader decline in the Economic Sentiment Indicator for the euro area to 96.6 in March.
China
China’s economy showed a relatively solid start in 2026, with GDP growing 5.0% (YoY) in the first quarter, supported by resilient external conditions and policy support. However, the recovery remains uneven. Industrial performance stayed strong, but consumption remained weak. External trade slowed, and the labor market weakened, indicating potential moderation ahead.
In the manufacturing sector, activity remained in expansion territory but showed mixed signals. Meanwhile, inflation eased to 1.0% (YoY), driven by weaker post-holiday demand and moderating food prices. The property sector continues to face persistent pressure, with housing prices declining by 3.4% (YoY), reflecting structural issues such as tight regulations, weak household demand, and a shift toward the secondary market.
To maintain stability amid these conditions and ongoing global uncertainty, the People’s Bank of China has kept the Loan Prime Rate at 3.0% for an extended period, signalling a cautious policy stance with limited room for aggressive monetary easing.
Indonesia
Indonesia’s economy in the first quarter of 2026 remained relatively resilient, but the latest data suggest that domestic support is becoming less broad-based. On the demand side, household consumption still held up. Bank Indonesia’s latest retail sales survey indicated that the Real Sales Index was expected to grow 2.4% YoY in March 2026, while realized February retail sales still posted 6.5% YoY growth, supported by Ramadan and Idulfitri-related spending. Consumer confidence also remained firmly optimistic, with the Consumer Confidence Index at 122.9 in March 2026, although this was lower than 125.2 in February 2026, pointing to some moderation in household sentiment. In other words, domestic demand was still supportive, but no longer strengthening as quickly as earlier in the quarter.
The production side also became more mixed. Indonesia’s Manufacturing PMI dropped sharply to 50.1 in March 2026 from 53.8 in February 2026, indicating that the strong February upswing was not sustained. S&P Global noted that output and new orders weakened again in March, while firms faced higher raw material costs and supply disruptions associated with the worsening external environment. Even so, the PMI remained marginally above 50, meaning that manufacturing had not yet fallen into outright contraction. At the same time, inflation moderated materially: headline CPI eased to 3.48% YoY in March 2026 from 4.76% YoY in February 2026, bringing inflation back within Bank Indonesia’s target range.
Financial conditions, however, remained more challenging. OJK reported that bank credit growth slowed to 9.37% YoY in February 2026 from 9.96% YoY in January 2026, while asset quality softened slightly, with gross NPL rising to 2.17% and LaR increasing to 9.24%. On the policy side, Bank Indonesia kept the BI-Rate at 4.75% in April 2026, confirming that the central bank still prioritized rupiah stability and macro-financial resilience amid heightened global uncertainty. Meanwhile, fiscal policy remained expansionary: by end-March 2026, state revenue reached Rp574.9 trillion, while the APBN deficit stood at 0.93% of GDP, indicating that the budget continued to act as a shock absorber in a more volatile external environment. Overall, Indonesia’s economy still showed resilience through consumption and policy support, but growth conditions became more uneven as manufacturing softened and macro-financial pressures persisted.
