Economies

• Taiwan, South Korea, Japan, and Vietnam are strategically positioning themselves to secure critical roles within the global AI value chain, moving beyond the US-China binary. • Each nation is targeting specific niches to ensure indispensability, such as Japan focusing on physical AI applications and advanced robotics. • This shift matters as these economies aim to leverage their existing industrial strengths to avoid being sidelined by the dominant AI superpowers.

• The Eurozone GDP performed better than expected in Q2 2026, though growth remained uneven across member states. • Lithuania led the expansion with 1.7% growth, followed by Sweden at 1.4%, while Portugal (0.8%) and Spain (0.7%) showed continued resilience in Southern Europe. • Economic stagnation occurred in Belgium and Austria, while major economies including Germany, France, and Italy experienced a slowdown in their growth rates.

• The International Monetary Fund (IMF) has given South Korea the largest growth outlook upgrade among the world's 30 major economies. • This upward revision is primarily driven by a massive boom in semiconductors fueled by the global surge in artificial intelligence (AI) technology. • The growth in the tech sector is significant enough to offset economic headwinds caused by ongoing conflicts in the Middle East.

• The IMF reports that top AI hardware exporters, including South Korea, Taiwan, Malaysia, and Thailand, outperformed growth forecasts by an average of 4.4 percentage points in Q1. • South Korea saw significant success, with an annualized growth rate of 7.5%—over four times the 1.8% projection—as semiconductor exports offset high energy costs. • Vietnam's 2026 growth forecast was raised by 0.4 percentage point to 7.5% due to the surge in technology exports.

• Europe is experiencing an AI funding surge, with the UK tech ecosystem reporting its strongest first-half performance since 2022. • Major funding rounds include Twelve Labs raising $100M in Series A for video AI infrastructure and Venice securing $65M for generative AI content. • Super.com raised $65M in Series D funding led by TPG, achieving a $1.2B valuation to expand its savings app in the US.

• The IMF forecasts that ten European economies, including Malta and Kosovo, could grow twice as fast as the eurozone through 2031. • Kosovo is projected to grow nearly 4% annually on average, though growth is expected to dip to 3.6% in 2025 and 3.3% in 2026 due to political deadlock. • Economic resilience in Kosovo is driven by a young workforce, public investment, and significant remittances from the diaspora in Germany and Switzerland.

• The IMF forecasts that the eurozone will grow by just over 1% annually through 2031, though smaller European economies are expected to significantly outperform this average. • Malta leads the medium-term growth rankings with an expected annual increase of nearly 4% over the next five years. • Ukraine is also projected to outpace the eurozone by more than two to one, driven by diaspora remittances from Germany and Switzerland, public infrastructure spending, and a growing banking sector.

• East Asian economies showed positive momentum, with China's service sector improving and Vietnam receiving an upgrade from the World Bank. • Major stock markets closed higher on Friday, including Tokyo (+1.5%), Hong Kong (+1.3%), and the ASX200 (+1.4%), reflecting a generally bullish trend across the region. • Global financial indicators remained volatile, with the US 10-year Treasury yield at 4.49%, gold prices rising, and the New Zealand dollar trading at 57.1 US cents.

• A YouGov poll of 6,156 adults across six major European economies—France, Germany, Spain, Italy, the Netherlands, and Poland—reveals broad public support for carbon pricing. • The survey was commissioned by a coalition of civil society organizations, including E3G, WWF, and Carbon Market Watch, to advocate for a green industrial transition. • These findings challenge political calls to weaken the EU Emissions Trading System (EU ETS) by demonstrating that citizens support climate action and industrial renewal.

• Researchers at Liberty Street Economics analyzed the resilience of emerging market economies (EMEs) during the U.S. monetary tightening cycle of 2022-23. • The study found that EMEs generally performed better in financial markets than predictive models suggested, with "more vulnerable" economies showing the most significant outperformance. • Economic activity results were mixed: vulnerable economies exceeded expectations, while less vulnerable economies performed worse than predicted.

• The Commerce Department's Bureau of Economic Analysis reported that U.S. economic growth rebounded in the first quarter of 2026. • GDP increased in 46 states and Washington, D.C., with Washington state seeing the highest annualized growth at 4.5 percent. • While a small number of states experienced economic contraction, nearly every state saw a rise in personal income and earnings.

• G7 leaders are meeting in France amidst concerns that tensions between the U.S. and Iran are negatively impacting the economies of member nations. • The group's global influence is declining, with its share of global GDP dropping from 60.5% at its inception to 44.1%, according to the Center for Strategic and International Studies. • This shift is driven by the rapid growth of developing economies, including China, India, and Brazil, leading to questions regarding the G7's ongoing relevance.

• West Bengal Chief Minister Suvendu Adhikari stated that India has transitioned from lagging in infrastructure development under previous regimes to becoming one of the world's fastest-growing economies. • Adhikari attributed this economic acceleration to strategic improvements in national infrastructure and governance. • This shift is significant as it highlights a perceived turnaround in India's global economic standing and internal developmental capacity.

• Asian economies, particularly South Korea and Taiwan, are experiencing extreme market volatility and rapid growth driven by the global AI trade. • Taiwan's stock market has surged to become the world's fifth largest, surpassing India and trailing only the U.S., China, Japan, and Hong Kong. • In South Korea, Lee’s Democratic Party is considering a "people's dividend" funded by AI profits to combat inequality, though critics view this as a temporary fix.

• Singapore and Thailand topped rankings as the world's 'least miserable' economies in the 2026 HAMI index by Johns Hopkins economist Steve Hanke, due to low inflation, steady employment, manageable borrowing costs, and income growth.• Southeast Asia identified as one of the 'healthiest economic neighbourhoods' globally, with households experiencing minimal economic strain amid positive indicators.• The index highlights regional resilience, contrasting with higher misery levels elsewhere, boosting consumer confidence and investment appeal.• Future editions may track if these trends persist amid global uncertainties.

Analysis shows they are reliant on market investors such as hedge funds, which contributed $4tn last yearBusiness live – latest updatesEmerging economies are at greater risk of higher interest rates and currency shocks as a result of the Iran war because of increased reliance on market investors such as hedge funds, the International Monetary Fund has warned.The IMF’s analysis shows that a cumulative $4tn flowed into emerging markets last year from outside the formal banking sector – including from hedge funds and investment funds. Continue reading...

The Trump administration initiated a second round of tariff investigations targeting 60 economies on March 13, 2026, aiming to rebuild its trade regime amid rising protectionism. US Treasury volatility jumped to a nine-month high, fueled by inflation concerns from oil shocks and trade tensions. Daimler Truck plans to offset tariff costs by increasing US content in Mexico-assembled trucks, as stated by CFO Eva Scherer. This escalation signals potential new duties that could impact global supply chains and corporate costs.

The Trump administration has initiated a second round of tariff investigations targeting approximately 60 economies as part of efforts to reshape international trade policy on March 13, 2026. Daimler Truck revealed it is adjusting its manufacturing strategy to mitigate tariff impacts, with CFO Eva Scherer noting plans to increase U.S. content in truck assembly and shift production from Mexico to reduce tariff burdens. The tariff uncertainty has contributed to volatility in U.S. Treasury markets, which have reached nine-month highs as investors grapple with inflationary implications. Market analysts remain concerned about the combined effect of tariffs and elevated oil prices on economic growth.