United States:
U.S. economic activity remained resilient in late 2025, with GDP growth accelerating to 4.3% (year-on-year / YoY) in Q3-2025, supported by strong consumer spending (+3.5%, YoY), a rebound in exports (+9.6%, YoY), and higher government spending. The services sector continued to expand, with the ISM Services PMI rising to 54.4 in December, while inflation stayed elevated at 2.7% (YoY), reinforcing expectations that the Federal Reserve will keep the policy rate on hold at 3.5%–3.75% in the near term FOMC that will be held on 27th – 28th January. However, underlying momentum showed signs of softening. Manufacturing activity weakened, with the S&P Manufacturing PMI at 52.2 and the ISM Manufacturing PMI remaining in contraction at 47.9, while job creation slowed markedly to just 584,000 in 2025, averaging around 49,000 jobs per month, the weakest pace since 2003 outside of recessions. Although the broader U-6 unemployment rate eased to 8.4%, persistent labor market slack and uneven sectoral performance point to a more cautious growth outlook ahead.
Euro Zone:
The euro area economy reflects divergent trends: headline inflation eased to 1.9% (YoY) in December 2025, reaching the ECB’s 2% target for the first time since August, while core inflation moderated to 2.3% (YoY). At the same time, retail sales volumes accelerated to 2.3% (YoY) in November, indicating relatively resilient consumer spending and supporting market expectations that the ECB will keep its policy rate unchanged at 2% in the near term. However, underlying economic momentum remains weak. Consumer confidence stayed firmly in negative territory at -13.1 in December 2025, while manufacturing activity continued to contract, with the HCOB Eurozone Manufacturing PMI falling to 48.8, the sharpest contraction since March. Combined with a downgraded growth outlook, ECB projections point to euro area growth of around 1.2% in 2026. These indicators highlight persistent headwinds and a fragile, uneven recovery outlook.
China:
China’s economy exhibited mixed signals in 2025. On the one hand, full-year economic growth remained broadly stable, reaching around the government’s 5% annual target, supported by a sustained trade surplus despite ongoing trade tensions. Manufacturing activity also showed modest improvement towards the end of the year, indicating some resilience in the external and industrial sectors. On the other hand, domestic conditions remained challenging. Consumer demand softened throughout the year, leading to deflationary episodes in several months of 2025. The prolonged property sector downturn continued to weigh on economic activity, while retail sales remained weak from mid-2025 onward, highlighting persistent domestic headwinds to a more balanced recovery.
Indonesia
Indonesia’s economy toward the end of 2025 showed positive signals, particularly on the demand side, largely driven by seasonal factors related to the year-end holiday period. This was reflected in inflation rising to 2.92% (YoY) in December 2025, approaching Bank Indonesia’s target, an increase in retail sales supported by higher mobility during the holiday season, and a broadly stable Consumer Confidence Index (CCI), which edged down slightly to 124.03 in December 2025. These developments were further supported by improving manufacturing activity, which accounted for roughly one-fifth of total economic output and remained in expansionary territory throughout Q4-2025.
Nonetheless, several challenges persist. On the external front, Indonesia recorded a trade surplus in December 2025. However, the surplus was driven less by stronger export performance and more by a sharper month-on-month contraction in imports. As a result, economic growth in Q4-2025 may moderate slightly due to weaker export performance, as exports contribute approximately 1–3% to GDP growth. In addition, consumer confidence remains uneven across income groups, indicating an uneven recovery in household demand. From a fiscal perspective, risks have increased as the central government budget (APBN) deficit approached the 3% threshold, raising concerns amid expectations of higher government spending in 2026. On the monetary policy front, Bank Indonesia continues to maintain an accommodative stance, keeping the policy rate at 4.75% in January 2026, while prioritizing macroeconomic and financial stability, particularly the stability of the rupiah exchange rate.
