Global Economy Briefing: December 22, 2025

Key Points

• UK business investment beat forecasts and the current-account gap narrowed, hinting at a firmer 2026 base.

• Europe’s external balances improved as Spain’s deficit shrank and Italy’s producer prices stabilized.

• North America was mixed: Mexico’s activity accelerated; Canada’s factory prices rose; U.S. growth tracker stayed slightly negative.

United States

The Chicago Fed National Activity Index printed −0.21, better than −0.31. Front-end funding stayed calm: 3-month bills at 3.560%, 6-month at 3.485%, and the 2-year note at 3.499%.

Signal: modest growth, orderly financing.

Europe and UK

Britain delivered the surprise. Business investment rose 1.5% q/q and 2.7% y/y. GDP grew 0.1% q/q and 1.3% y/y.

The current-account deficit narrowed to £12.1B. Retail headwinds remain, but the capex pulse is improving.

Germany’s producer prices were flat m/m and −2.3% y/y earlier; today’s GfK for January slipped to −26.9, keeping the mood cautious.

Italy’s PPI turned firmer at 1.0% m/m while still −0.2% y/y. Spain’s trade gap narrowed to €−4.69B from €−6.00B.

Switzerland’s M3 rose to CHF 1,210.5B. Norway’s jobless rate was 4.5%.

Read-through: disinflation persists, but Europe’s external cushions are thickening.

Asia-Pacific

Hong Kong’s CPI was steady at 1.2% y/y and flat m/m. India’s infrastructure output rose 1.8% y/y, a clean turn from −0.1%.

Australia’s reserves increased to A$113.1B; meeting minutes were due after the close. New Zealand’s M3 edged up to NZ$443.6B.

Net: the region keeps price pressure low while demand pockets improve.

Latin America

Mexico’s October activity accelerated: +1.0% m/m and 1.7% y/y. Brazil’s consumer confidence ticked up to 90.2.

Federal tax revenue reached R$226.75B (~$42B), versus R$216.73B (~$40B) prior. That supports a steadier fiscal path into early 2026.

Canada

Factory gate prices rose 0.9% m/m and 6.1% y/y. Raw material prices gained 0.3% m/m and 6.4% y/y. The impulse is upstream, not yet a demand surge.

What it means

Three themes stood out. First, the UK’s investment beat and smaller external gap lower sterling risk and soften recession odds.

Second, Europe’s trade and PPI prints point to cheaper inputs with healthier balances, a tailwind for exporters.

Third, Mexico’s growth quickened while U.S. financing costs eased at the front end, supporting North American supply chains.

Asia remains the inflation anchor. Portfolio tilt: hold quality duration; add selectively to UK and euro industrials with dollar-priced inputs.

Stay overweight Mexico on improving momentum; watch Canada’s upstream price pulse; in Brazil, firmer revenues and slightly better sentiment support carry while growth repairs.

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