Beyond the gloom: reasons for optimism in the global economy

Not all signs point to crisis. Strong profits in the US, resilience in Europe, Chinese policy levers and tentative reform in SA all hint at brighter prospects

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inflation, the Fed cut interest rates for the first time since December 2024.

This may not help the housing sector much, as long-term rates may stay high on fiscal concerns, keeping mortgages expensive. But it could be a meaningful boost for small businesses, which should see working capital costs fall, as well as consumers, who should see their credit card bills decrease.

Europe: a tale of two economies

Across the Atlantic, Europe presents a divided picture. Several of its largest economies are undeniably struggling. The UK economy has spent the decade since Brexit mired in stagnation, with the hapless Labour government powerless to crank it into movement.

France is the latest “problem child” of Europe as successive governments have collapsed under the pressure of its fiscal woes. Germany, after years of energy shocks and industrial weakness, is battling with an automotive sector struggling to make the shift to electric vehicles and the loss of China as a dependable export market.

Yet, despite these woes, the EU economy is remarkably resilient. The eurozone’s 20-nation economy expanded by 0.1% in the second quarter, defying expectations of a contraction and showing hardiness.

The European Central Bank has begun cutting rates. Unemployment is at record lows, and although this could signal that the only way is up, until now there have been no signs of softening like in the US.