United States:
Recent indicators show the US economy remains on an expansionary path but is gradually losing momentum. The S&P Global Manufacturing PMI eased to 52.2 in November 2025 from 52.5 in October 2025, while the Services PMI declined to 54.1 from 54.8, both still signalling moderate growth. Manufacturing output stayed firm but was increasingly supported by inventory accumulation as new orders weakened, while services activity continued to benefit from relatively steady domestic demand. Cost pressures persisted due to tariffs, higher metal prices, and rising labor costs. However, strong competition limited firms’ ability to raise selling prices, putting pressure on profit margins. Inflation showed signs of easing, with headline CPI moderating to 2.7% YoY in November 2025 and core inflation at 2.6% YoY, although price pressures remained uneven across components, particularly in shelter and energy. Meanwhile, the labor market continued to cool. The unemployment rate rose to 4.6% in November, the highest since September 2021, while the broader U-6 measure signaled rising underemployment. Against this backdrop, the Federal Reserve cut the policy rate by 25 bps in December 2025 to 3.50–3.75% to balance moderating growth, easing inflation, and rising employment risks.
Euro Zone:
Economic conditions in the Euro Zone continued to point to a fragile and uneven recovery at the end of 2025. Consumer confidence held at -14.2 in November 2025, the highest level in eight months but still firmly negative, indicating continued household caution. Manufacturing activity stayed in contraction, with the PMI at 49.2 in December 2025, down from 49.6 in the previous month, reflecting weak demand despite improving expectations. Retail sales stabilized, posting 0.0% MoM growth in October 2025 and rising 1.5% YoY, signalling a gradual recovery in consumer demand. Inflation edged higher, with headline CPI increasing to 2.2% YoY in November 2025, driven by stronger services inflation at 3.5%, while core inflation remained steady at 2.4%.
China:
China’s November 2025 data point to weak stabilization rather than a strong recovery. Manufacturing PMI edged up to 49.2 in November 2025, but remained in contraction, with uneven performance across sectors, where state-linked and high-tech industries stayed relatively resilient, while small private firms continued to face pressure from weak domestic demand. The labor market remained stable, with the unemployment rate at 5.1% in November 2025, but longer working hours reflected efficiency gains rather than an expansion in employment. The rise in headline CPI inflation to 0.7% year-on-year in November 2025 was temporary and largely driven by food prices, while core inflation remained subdued, indicating that deflation risks persist. Demand weakness was most evident in the sharp slowdown in retail sales growth to 1.3% year-on-year in November 2025, reflecting cautious household behavior amid income uncertainty. Overall, China’s economy is stabilizing on a low-growth trajectory, supported by policy measures and exports, but it has yet to achieve a sustainable domestic recovery.
Indonesia:
Indonesia’s macro indicators at the end of 2025 point to resilient but increasingly uneven growth dynamics. GDP growth is expected to remain stable at around 5.0% in 2025, with a modest uptick in 2026 supported by domestic demand, fiscal support, and accommodative monetary conditions, although near-term momentum may soften due to natural disaster disruptions and external headwinds. Inflation moderated to 2.72% YoY in November, staying comfortably within the target range as food price pressures eased, while core inflation remained steady, suggesting contained underlying demand pressures despite lingering cost increases in services and logistics.
Activity indicators were mixed: manufacturing strengthened notably, with the PMI rising to 53.3 on robust domestic orders and output gains, but foreign demand weakened and cost pressures intensified; retail sales growth also accelerated ahead of year-end holidays, reflecting improved consumer sentiment, which climbed to its highest level since February. Externally, the trade surplus narrowed sharply as exports contracted, particularly in oil and gas, underscoring vulnerability to global demand and tariff effects despite a still-large cumulative surplus. Against this backdrop, Bank Indonesia kept the policy rate unchanged at 4.75%, prioritizing rupiah stability amid global financial volatility, while fiscal policy is becoming more constrained by revenue shortfalls even as spending pressures remain rigid. Overall, Indonesia enters 2026 with a stable growth base and strong domestic buffers, but execution risks, external sensitivity, and tightening fiscal space suggest a shift from cyclical support toward policy credibility, efficient implementation, and productivity-enhancing reforms.
