BANK OF CHINA(SH:601988) Zhong Guo Jin Rong Xin Xi Wang·2025-03-27 12:49Core Viewpoint - The report from the Bank of China Research Institute indicates an increase in global economic downturn risks in Q2 2025, with projected real GDP growth rates of approximately 2.6% for Q2 and 2.4% for the entire year [1] Demand Side Summary - The report highlights that U.S. tariff policies may trigger a chain reaction, leading to rising price levels that pressure global private consumption. Additionally, global investment activities are expected to remain sluggish, with government spending in the U.S. and EU showing divergence. Overall, the demand side is likely to contract in Q2 [1] Supply Side Summary - On the supply side, the global manufacturing recovery is anticipated to face cost shocks, while the service sector may gradually return to long-term trend levels. The report notes that despite good growth prospects for digitalization, automation, and related services, weakened expectations for employment and income growth will reduce spending on leisure and tourism. Thus, the supply side will continue to face pressure in Q2 [1] International Financial Market Summary - In terms of cross-border capital flows, global Foreign Direct Investment (FDI) is expected to maintain low growth in Q2, with adjustments in securities investment flows. For the entire year of 2025, global FDI inflows are projected to remain flat or see slight increases compared to 2024 [1] Foreign Exchange Market Summary - The report anticipates a turning point in major currency trends, with increased volatility in global exchange rates. The U.S. dollar index is expected to fluctuate at high levels, while Asian currencies show overall resilience, and Eastern European currencies may face corrections. The overall volatility in the foreign exchange market is increasing, suggesting caution against rapid reversals in arbitrage trading [2] Bond Market Summary - The report predicts an overall rise in global debt levels in Q2, although the growth rate of debt is expected to slow further. Factors such as reduced supply pressure may lead to downward pressure on U.S. Treasury yields, while fiscal reforms in Germany and spillover effects are likely to increase volatility in the European bond market [2] Stock Market Summary - The global stock market fundamentals are considered relatively stable, but policy uncertainties are expected to increase market volatility. The report indicates that there remains upward momentum in global stock markets in Q2, with non-U.S. markets becoming more attractive. Technology stocks may show divergent trends, while the financial, power, and resource sectors are highlighted as areas of interest [2] Commodity Market Summary - The report forecasts increased volatility in global commodity prices in Q2. It notes that international oil demand growth may lag behind supply, putting continued pressure on oil prices. Gold prices are expected to experience short-term fluctuations but maintain an overall upward trend. Key minerals are anticipated to become a new battleground among nations, reshaping the global supply-demand landscape [2]