Global Economy Briefing — March 14, 2026

Europe

Industrial Production Collapse Dashes Recovery Hopes

Eurozone industrial production plunged 1.5% month-on-month in January, missing expectations for a 0.6% gain by a mile. It was the steepest monthly contraction since April 2025 and threw cold water on any hopes that the manufacturing sector had turned a corner. Non-durable consumer goods led the decline with a 6.0% collapse, while capital goods dropped 2.3%.

Germany, Italy, and Spain all reported contracting factory output, with German production falling 1.3% and now sitting 9% below its 2021 level. On a year-over-year basis, total Eurozone output declined 1.2% against a Reuters consensus for 1.4% growth. Energy was the only bright spot, rebounding 4.7%, but it could not offset the breadth of the weakness elsewhere.

France’s final February CPI confirmed at 0.9% year-on-year, a tick below the 1.0% estimate and well below the ECB’s target. Spain held steady at 2.3%, matching consensus. Eurozone core CPI was confirmed at 2.7%, inline with expectations but marginally above January’s 2.6% reading. The disinflationary trend across the continent was visible before the energy shock kicked in.

The United Kingdom told a similar story. January GDP flatlined at 0.0%, missing the 0.2% forecast, with services stalling and production dipping 0.1%. Economists warned this data predates the energy price shock from the Iran war, meaning the worst may be yet to come. The FTSE 100 shed 0.4% and the DAX lost 0.6% on the session.

United States

GDP Halved, PCE Holds, Stagflation Fears Mount

The BEA’s second estimate for Q4 2025 GDP came in at just 0.7% annualized, a savage downward revision from the 1.4% advance reading covered in our February 21 briefing. The miss reflected broad-based cuts to exports, consumer spending, government expenditure, and investment. The 43-day government shutdown in October-November was a key drag, though the underlying deceleration from Q3’s 4.4% pace was unmistakable. Full-year 2025 GDP was revised to 2.1%.

On the inflation front, the PCE price index eased to 2.8% year-on-year in January from 2.9%, marginally below consensus. Core PCE, the Fed’s preferred gauge, rose to 3.1% from 3.0%, matching expectations. The GDP price index accelerated to 3.8%, revised up from 3.7%, signaling persistent price pressures in the broader economy even as headline growth crumbles.

JOLTS job openings surprised to the upside at 6.946 million versus 6.760 million expected, indicating the labor market has not yet buckled despite growth headwinds. Durable goods orders were flat against a 1.1% consensus gain. Michigan consumer sentiment edged down to 55.5, with the pre-Iran-war interviews showing improvement that was completely erased once fighting began. Five-year inflation expectations eased to 3.2%.

The S&P 500 fell 0.61% to 6,632, notching a new 2026 low and completing its first three-week losing streak in about a year. The 10-year Treasury yield held near 4.26% despite the growth scare, as oil-driven inflation fears kept bonds under pressure. WTI crude settled at $98.71, up 3.1%, while Brent crossed $103. The DXY surged above 100 on safe-haven flows. Adobe crashed 7.6% after a CEO departure and guidance miss.

Asia-Pacific

China Credit Beats, India Reserves Slide

China’s February credit data came in ahead of expectations. New yuan loans reached 900 billion, beating the 865 billion consensus, while total social financing surged to 2,380 billion versus the 2,130 billion forecast. M2 money supply growth held steady at 9.0%, matching the prior month and a hair above the 8.9% estimate.

The data suggests Beijing’s credit impulse remains active despite the usual seasonal slowdown from the Lunar New Year period. Outstanding loan growth was inline at 6.0%. The PBOC continues to funnel credit into the economy, though the gap between total social financing and traditional bank lending points to increased shadow bank and bond-market activity.

India’s foreign exchange reserves dropped to $716.8 billion from $728.5 billion, the sharpest weekly decline in months as the RBI defended the rupee against dollar strength and the oil import bill ballooned. Bank loan growth accelerated to 14.5% from 13.6%, while deposit growth rose to 11.9%. The widening gap between loan and deposit growth continues to pressure domestic liquidity.

The Nikkei 225 fell 1.2% and the Hang Seng lost 1.0% as the energy shock and US growth downgrade weighed on regional sentiment. Shanghai’s SSE Composite slipped 0.8%. Gold, typically a beneficiary of uncertainty, actually fell roughly 2% to around $5,023 as the surging dollar sapped safe-haven demand for the metal.

Latin America & Africa

Mexico Industry Crumbles, Brazil Services Hold

Mexico’s industrial production collapsed 1.1% month-on-month in January, missing expectations for a flat reading by a wide margin. Year-on-year output fell 1.1% against a 1.7% consensus gain, reversing the prior month’s 2.4% advance. The data underscores mounting pressure on Mexico’s manufacturing sector from elevated energy costs and US demand uncertainty.

Brazil’s service sector grew 0.3% month-on-month in January, recovering from December’s 0.2% contraction. Year-on-year expansion decelerated to 3.3% from 3.6%. The services rebound offers a modest counterpoint to the industrial weakness seen across much of the hemisphere, though the pace of growth is clearly moderating from the mid-2025 highs.

Canada’s brutal jobs report is relevant for the hemisphere’s trade dynamics. The 83,900-job loss was concentrated in Quebec, which shed 57,000 positions alone. Youth unemployment surged to 14.1%. BMO called it one of the worst non-pandemic months ever. With the US-Canada trade war layered on top of the Iran conflict, North America’s economic engine is sputtering on multiple fronts.

The Ibovespa retreated as oil prices tested $100 and the dollar strengthened against emerging market currencies. CFTC data showed speculative BRL net longs rising to 51,000 contracts from 45,000, suggesting some traders still see value in the real despite the global risk-off. MXN net longs declined modestly to 73,800 from 77,000.

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