Swiss Economy Growth Forecast Cut By IMF to 1.3% for 2025

Forex

Economic

Summary:

The International Monetary Fund (IMF) has reduced its growth forecast for the Swiss economy to 1.3% for 2025,...

The International Monetary Fund (IMF) has reduced its growth forecast for the Swiss economy to 1.3% for 2025, down from its previous projection of 1.7%.

In its latest report released on Tuesday, the IMF cited worsening geopolitical tensions and tariffs as factors negatively affecting economic performance in Switzerland.

The IMF also provided its first outlook for 2026, projecting Swiss economic growth of 1.2%. Both forecasts fall below Switzerland’s long-term average growth rate of 1.8%.

These figures have been adjusted to account for the impact of sporting events, which can distort economic data due to broadcast income received by Swiss-based organizations such as FIFA and the International Olympic Committee.

The IMF’s downward revisions follow similar forecast cuts by the Swiss government and the Swiss National Bank.

"With global headwinds, growth is projected to remain somewhat below potential in 2025-26," the IMF stated in its report.

Source: Investing

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Gerik

Economic

EU Seeks Strategic Balance Under Looming U.S. Tariff Regime

The European Union is navigating high-stakes trade negotiations with the United States as President Trump pushes for a sweeping 10% universal tariff on imports, alongside higher sector-specific levies. While the EU is prepared to accept the framework of a uniform tariff, it is urgently seeking exemptions or adjusted rates for critical sectors such as pharmaceuticals, alcohol, semiconductors, and commercial aircraft. This negotiation comes under the shadow of a July 9 deadline, after which nearly all EU exports to the U.S. would face a 50% tariff absent a deal.

This approach reflects the EU’s pragmatic pivot toward damage control: while the bloc cannot prevent U.S. protectionism, it aims to mitigate the impact on industries that are export-intensive, innovation-driven, or highly integrated into transatlantic supply chains.

Automotive, Steel, and Aluminum Sectors at the Heart of Talks

Among the most contentious issues are the U.S. tariffs on European automobiles (25%) and steel and aluminum (50%). In 2024, the EU exported €52.8 billion worth of cars and parts to the U.S., and €24 billion in steel and aluminum, with Germany, France, and Italy as top contributors. These sectors are disproportionately exposed to any breakdown in trade negotiations.

The EU is asking Washington to offer quota-based relief and tiered exemptions to avoid sweeping damage to these key industries. There is a clear causal concern here: failing to secure exemptions would erode the global competitiveness of EU exporters and amplify the political and economic cost of Trump's “America First” tariff doctrine.

Negotiation Strategy Focuses on Interim Compromise

With time running short, the European Commission hopes to secure an interim agreement that would allow negotiations to continue beyond the deadline. This transitional accord would ideally preserve space for resolving more complex tariff and non-tariff barriers and lay the groundwork for strategic cooperation in areas such as artificial intelligence, liquefied natural gas, and economic security.

EU Trade Commissioner Maros Sefcovic is set to join the Brussels team in Washington this week, signaling the urgency of direct high-level engagement. While the Commission has not disclosed the full details of the American offer, internal discussions among member states suggest that Brussels is considering a range of outcomes, from a deal with “acceptable asymmetry” to full-scale retaliation should talks collapse.

Markets React to Progress, But Asymmetry Remains a Concern

Markets responded swiftly to early news of EU acceptance. The S&P 500 briefly fell before rebounding, while the Stoxx Europe 600 gained 0.6%. This suggests investors are cautiously optimistic that a disruptive tariff war might be avoided. ING strategist Vincent Juvyns noted that markets are interpreting the dialogue through a “glass-half-full” lens.

Still, the EU’s willingness to accept an imbalanced deal—favoring the U.S. in aggregate—signals not just diplomatic compromise but also concern about the consequences of failed negotiations. The EU estimates that current U.S. tariffs affect €380 billion worth of European exports, or around 70% of total goods shipped to the U.S. market.

Contingency Planning: The EU’s Retaliatory Arsenal

Even as it negotiates in good faith, the EU is preparing a comprehensive countermeasure package should Trump walk away. Already approved are tariffs on €21 billion worth of U.S. goods, strategically targeting swing states and political constituencies, including agricultural products and motorcycles.

Additionally, Brussels has drawn up a second list of retaliatory tariffs worth €95 billion, which could affect U.S. exports like Boeing aircraft, bourbon, and U.S.-made automobiles. Beyond tariffs, the EU is also exploring export controls, public procurement exclusions, and leveraging areas where the U.S. depends on EU technologies or inputs.

The EU’s conditional acceptance of Trump’s universal tariff proposal marks a shift toward strategic accommodation, yet the negotiation outcome remains finely balanced. With critical sectors hanging in the balance and retaliation tools already locked and loaded, the coming days will define whether the transatlantic relationship moves toward compromise or conflict. Any resolution—interim or final—will shape trade flows, political alliances, and global supply chains far beyond the July 9 deadline.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Glendon

Economic

Forex

The U.S. dollar retreated further Tuesday, falling to multi-year lows on growing expectations of interest rate cuts, while President Donald Trump’s spending bill stoked fiscal worries.

At 04:25 ET (08:25 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, dropped 0.2% to 96.275, dropping to its lowest level since February 2022.

Dollar under pressure

The U.S. currency has fallen to multi-year lows, pressured by increasing expectations that the Federal Reserve will cut interest rates in the coming months, optimism of upcoming trade deals, as well as political sparring over a sweeping tax and spending cut bill.

“The dollar continues to grind lower in a move probably now best categorised as an orderly dollar bear trend. After a structurally driven decline of the dollar in April, its losses over the last month or so have become cyclical, as earlier Fed easing becomes priced,” said analysts at ING, in a note.

Expectations of easing from the U.S. central bank are growing, particularly as U.S. President Donald Trump continues to urge the Fed to ease monetary policy, sending Fed Chair Jerome Powell a list of central bank interest rates around the world adorned with handwritten commentary saying the U.S. rate should be between Japan’s 0.5% and Denmark’s 1.75%.

Trump’s constant tirade against the Fed and Powell has fuelled investor worries about the central bank’s independence and its credibility, weighing on the dollar.

Investors are also grappling with uncertainty over the U.S. Senate’s efforts to pass Trump’s tax-cut and spending bill, which faces internal party divisions over its projected $3.3 trillion addition to the national debt.

“Back to the short term, the dollar has come quite far already and this bear trend probably needs feeding with some macro news. That news comes today in the form of the June ISM manufacturing release and the JOLTS data,” ING added.

Euro just off four-year high

In Europe, EUR/USD slipped 0.1% to 1.1781, just below its previously hit four-year high of 1.1808.

The single currency surged 13.8% in the January-June period, its strongest-ever first half performance, LSEG data showed.

Traders are waiting for the latest preliminary inflation data from the eurozone, which is expected to have hit 2% in the year to June, which would be in line with the European Central Bank’s target.

Earlier this month, the ECB cut rates for the eighth time in a year but indicated it would likely pause at its next meeting, citing uncertainty linked to trade tensions with the United States.

Manufacturing purchasing managers indexes data for France, Germany, and eurozone for June are also due for release later in the session, and investors will also study comments from central bank chiefs at the European Central Bank forum in Sintra, Portugal.

GBP/USD gained 0.3% to 1.3764, not far from the three-and-a-half-year high it touched last week.

British house prices fell by 0.8% in June, a sharper fall than forecast and the biggest monthly decline in more than two years, data from mortgage lender Nationwide showed on Tuesday.

“Sterling could also face some political risk as Prime Minister Keir Starmer faces a backbench revolt over welfare reforms. The government has already been forced to make about £4bn of concessions to get the bill through – although its passage is not guaranteed. Any failure to get the bill through could hit sterling and gilts on the view that further concessions will have to be made at a time when there is no fiscal headroom,” ING added.

Japanese yen helped by safe-haven demand

In Asia, USD/JPY traded 0.7% lower to 143.06, with the Japanese currency benefitting from safe-haven demand after President Trump lashed out against Tokyo for alleged unwillingness to buy American-grown rice, while also hinting at ending trade talks with Tokyo.

Japanese officials signaled on Tuesday that they were still pushing for a tariff agreement with the U.S., but would not compromise the country’s agricultural industry for a deal.

USD/CNY slipped marginally lower to 7.1624, close to its strongest level since November following some upbeat purchasing managers index data this week.

Caixin PMI data on Tuesday showed China’s manufacturing sector rose back into expansion territory in June, as local manufacturers benefited from Washington and Beijing agreeing to temporarily slash their respective trade tariffs.

Source: Investing

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Michelle

Political

The Prime Minister of Thailand, Paetongtarn Shinawatra, was suspended by the country's constitutional court on Tuesday pending an investigation into a leaked phone call with a senior Cambodian politician.

The judges voted 7 to 2 to suspend the 38-year-old prime minister after accepting a petition from 36 senators accusing her of dishonesty and a breach of ethical standards.

Why has Thailand's prime minister been suspended?

Paetongtarn has faced growing dissatisfaction over her handling of a border dispute with neighboring Cambodia, which saw a Cambodian soldier killed in a violent clash in May.

During a leaked June 15 phone call with Cambodian Senate President Hun Sen, Paetongtarn appeared to criticize an outspoken Thai army commander — considered a red line in a country where the military has significant clout.

Despite apologizing and insisting that her remarks were a negotiating tactic, thousands of conservative, nationalist-leaning protesters rallied in central Bangkok on Saturday to demand the prime minister's resignation.

"I only thought about what to do to avoid troubles, what to do to avoid armed confrontation, for the soldiers not to suffer any loss," she said. "I wouldn't be able to accept it if I said something with the other leader that could lead to negative consequences."

Paetongtarn first has 15 days in which to provide evidence to the constitutional court to support her defense, in which time Deputy Prime Minister Suriya Juangroongruangkit is expected to become acting prime minister.

"Government work doesn't stop, there is no problem," Tourism Minister and Pheu Thai Party Secretary-General Sorawong Thienthong told the Reuters news agency. "Suriya will become caretaker prime minister."

Thai government under pressure

However, the government has been left with only a wafer-thin majority after Paetongtarn's leaked call saw a key party abandon her coalition and threaten a no-confidence vote.

Earlier on Tuesday, King Maha Vajiralongkorn endorsed cabinet reshuffle which should have seen Paetongtarn assume the position of culture minister in addition to prime minister. But it's unclear if she will be able to be sworn into the role during her suspension.

She said on Monday that she would accept and follow the process but she didn't want to see her work interrupted.

It's not the first time that Paetongtarn has faced allegations over ethics breaches; she is currently also under investigation by Thailand's Office of the National Anti-Corruption Commission in a separate case.

The Constitutional Court last year removed her predecessor over a breach of ethics while her father, the influential former Prime Minister Thaksin Shinawatra, was deposed in a military coup in 2006.

Also on Tuesday, a spokeswoman for the Chinese Foreign Ministry insisted that would not comment on an "internal" Thai affair but said: "As a friendly neighbor, we hope that Thailand will maintain stability and development."

Source: DW

Risk Warnings and Disclaimers

Add to Favorites

Glendon

Economic

Forex

Euro zone inflation edged up last month to the European Central Bank's 2% target, confirming that the era of runaway prices is over and shifting policymaker focus to trade war-induced economic volatility.

Inflation in the 20 nations sharing the euro currency crept up to 2.0% in June from 1.9% a month earlier, in line with expectations in a Reuters poll of economists, as energy and industrial goods continued to pull down prices, offsetting quick services inflation.

Underlying inflation, a closely watched measure that excludes volatile food and fuel prices, meanwhile held steady at 2.3%, in line with expectations.

Anticipating this fall, the ECB has lowered interest rates from record highs by two full percentage points over the last year, and debate has turned to whether it needs to ease policy further to prevent inflation becoming too low given weak growth.

The development in services costs, which have been stubbornly high for years, is pivotal as it has raised fears that domestic inflation could get stuck above 2%.

Last month, services inflation edged up to 3.3% from 3.2%, as prices rose 0.7% on the month, supporting the argument of policy hawks that domestic inflation remains uncomfortably high, reducing the risk of undershooting.

Financial investors expect one more ECB rate cut to 1.75% towards the end of the year, then anticipate a period of steady rates before possible increases towards the end of 2026.

The outlook, however, is complicated by the fact that it depends on the outcome of a trade dispute between the EU and the U.S. President Donald Trump's administration.

For now, the conflict has reduced price pressures because it has sapped economic confidence, pushing up the value of the euro and lowering energy prices.

Indeed, the euro zone's economy is barely growing, with full-year expansion expected at less than 1%, as industry struggles after a multi-year recession, with private consumption weak and investment low.

If U.S. trade barriers stay, the EU is likely to retaliate and that is bound to be inflationary. Firms will then start rearranging value chains, which would add to increased production expenses.

Once the cost of the green transition and the ageing of the working age population are factored in, then prices could come under more sustained upward pressure, economists say.

Source: Yahoo Finance

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Michelle

Economic

Forex

Britain's manufacturing sector showed some signs of turning a corner in its long slump and businesses pushed up their prices in June to offset higher labour costs, according to a survey published on Tuesday.

The S&P Global/CIPS manufacturing Purchasing Managers' Index improved for a third month in a row to 47.7 in June from 46.4 in May although it remained below the 50.0 growth threshold for a ninth month in a row.

The reading was unchanged from a preliminary estimate.

The severity of the downturn eased in output, hiring and new orders, the PMI showed.

"That said, any hoped for stabilisation remains fragile and subject to potential headwinds that could severely impact demand, supply chain reliability and future growth prospects," Rob Dobson, director at S&P Global Market Intelligence said.

The Bank of England, which kept interest rates at 4.25% last month, has said it is focusing on the conflicting inflation risks from a weaker labour market and from higher energy prices due to conflict in the Middle East.

Input costs rose for an 18th month with firms citing higher wages and suppliers raising prices due to finance minister Rachel Reeves' employer payroll tax increase as well as geopolitics and concerns over future government policy.

Companies passed on part of the higher costs to consumers, S&P said.

Hiring shrank for the eighth month in a row and exports contracted at their fastest pace since November, reflecting uncertainty around U.S. President Donald Trump's import tariffs, weaker demand from the United States, Europe and China.

But the share of manufacturers expecting higher output in a year's time rose to 46% as sentiment reached a four-month high.

On Monday, a survey published by Lloyds showed business confidence rose to its highest in nine years.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

A Record-Breaking First Half for European Banks

European banking stocks have delivered their most impressive first-half performance since 1997, with the Stoxx 600 Banks Index climbing 29% through June 30. This remarkable rally, led by strong profitability, increased capital returns, and a vibrant M&A landscape, has made the banking sector the top-performing subgroup in Europe for the first half of 2025.

Investor appetite has surged in response to improved fundamentals. Despite macroeconomic headwinds and lingering trade uncertainties, many institutions have strengthened their balance sheets, streamlined operations, and benefited from the tailwinds of elevated interest rates and fiscal stimulus, especially in Germany and southern Europe.

Societe Generale and Strategic Restructuring Lead France’s Gains

Societe Generale SA emerged as one of the best-performing financial stocks in Europe, gaining 79% year-to-date. CEO Slawomir Krupa’s restructuring strategy—emphasizing the divestment of non-core units and efficiency enhancements—has begun to yield results, with analysts projecting further upside. SocGen’s revival highlights a causal relationship between cost discipline, capital optimization, and market valuation.

Banco Santander, in a June report, named SocGen its top French pick, citing the French lender's potential to deliver positive earnings surprises amid deeper operational reforms.

Commerzbank’s Rally Reshapes German M&A Landscape

Germany’s Commerzbank AG also made headlines after its market capitalization surpassed €30 billion in May, driven by consistent earnings growth and earlier merger speculation. Its stock has more than doubled since UniCredit expressed interest in late 2023. However, CEO Andrea Orcel later dismissed the possibility of a takeover, noting the valuation surge made a merger economically unattractive.

Here, the causality is evident: a speculative M&A premium initially lifted shares, but sustained gains are now driven by core earnings strength and investor confidence in Commerzbank's standalone trajectory.

Spain’s Banking Sector Sustains Strength Through Rate Cycle

Spanish lenders have maintained momentum despite the European Central Bank's rate-cutting cycle. Banco Santander, up 57% year-to-date, has surpassed UBS to become continental Europe’s most valuable lender. Meanwhile, BBVA remains committed to its acquisition of Banco Sabadell, despite political delays, signaling strong institutional confidence in further sector consolidation.

The sustained strength of Spanish banks reflects a correlation between high fee income, M&A activity, and robust core performance, insulating them from interest rate sensitivity more effectively than peers.

Deutsche Bank Rides Fiscal Stimulus and Shareholder Focus

Deutsche Bank AG has advanced 51% in 2025, supported by its enhanced shareholder returns strategy and optimism around Germany’s fiscal spending. CEO Christian Sewing has prioritized increasing dividends and buybacks as part of his broader effort to re-anchor investor sentiment.

Although recent volatility followed disclosure around capital ratios, the broader rally is causally linked to Germany’s expansive fiscal programs and Deutsche Bank’s strategic clarity on shareholder value creation.

Italian Banks in M&A Spotlight

Italy’s financial sector is undergoing a restructuring phase marked by aggressive deal-making. UniCredit, up 48% in the first half, has eclipsed Intesa Sanpaolo in market capitalization. Its moves to consolidate domestically and expand in Greece signal a shift from balance sheet repair to regional dominance.

Smaller institutions such as Mediobanca and Banca Generali have also set new records, reflecting broader confidence in Italy’s post-cleanup banking landscape. The upswing here is causally tied to strong earnings and renewed acquisition strategies.

Valuation and Outlook: Still Room to Run?

Despite the rally, analysts remain cautiously optimistic. KBW’s Andrew Stimpson points out that sector valuations are still below historical averages, implying further upside potential, particularly if earnings resilience continues and the macroeconomic backdrop stabilizes.

The banking sector’s improved earnings profile, capital discipline, and strategic focus on M&A and shareholder returns form a robust foundation for continued investor engagement—even as geopolitical risks and economic uncertainty persist.

The historic rally in European bank stocks reflects a sector-wide transformation, underpinned by better earnings, focused restructuring, and heightened investor returns. With deal-making and capital deployment set to continue, banks across France, Germany, Spain, and Italy are repositioning themselves for a new era of regional competition and global relevance. As long as valuation multiples remain attractive and balance sheets solid, the banking sector may extend its leadership into the second half of the year.