Global Economic Winds: Empathy's Key

Hello everyone, this is Empathy Keeper from 'The Beginning of Empathy' blog. Aren't we all living in an interconnected world? We experience daily how a small change in one nation can swiftly affect the other side of the globe. Looking through the diverse news from 24 countries just yesterday, I was once again reminded of how deeply and widely this interconnectedness permeates our lives.

The global economy, in particular, is like a grand orchestra. Some instruments play a powerful melody, while others emit uncertain notes, but ultimately, all sounds blend to create one vast flow. Yesterday's news revealed some fascinating commonalities and differences within this economic orchestra. Shall we explore together how each nation is adapting amidst the major currents of trade policy and technological advancement, embracing empathy in our discussion?

One of the most striking common threads yesterday was the ripple effect of trade policies. The tariff policies of US President Donald Trump were, as expected, impacting regions across the world. Japan's Mitsubishi Motors announced a 97.5 percent decrease in net profit for the period of April to June 2025. This was primarily attributed to the strengthening Yen and a burden of 14.4 billion Yen due to US tariffs. Germany's Volkswagen also saw its second-quarter operating profit drop by nearly 30 percent, with high US tariffs cited as a major factor. Luxury brands like Porsche and Audi, which export all their vehicles from Europe to the US, appear to have been directly hit by these tariffs. German sportswear company Puma also reported a second-quarter sales decline and a shift to losses, estimating an 80 million Euro loss due to US tariffs. Even the US company Tesla received a warning from CEO Elon Musk, stating they 'could face difficulties for several quarters' due to factors like the end of tax credits and tariffs. This was a widespread concern, covered as major news in the UK, Argentina, and Australia. Such reports go beyond mere corporate performance, signaling fundamental changes required in global supply chains and manufacturing strategies. Companies are now undertaking diverse efforts for survival, such as reorganizing production bases or exploring new markets.

Technological industry restructuring and the dual nature of artificial intelligence were also significant trends. Intel, a US company, exceeded revenue forecasts for the second quarter but posted billions of dollars in losses, announcing a massive restructuring. They stated plans to cancel semiconductor factory constructions in Germany and Poland, consolidating testing and assembly operations in Vietnam and Malaysia. This appears to be a strategic shift focused on profitability amidst over-investment and market demand uncertainty in the semiconductor industry. They plan to reduce their workforce by about 15 percent, cutting staff to 75,000 by year-end. However, even amidst these challenges, the artificial intelligence sector continues to show strong growth momentum. Taiwan's Foxconn saw its stock price surge due to robust demand in the AI supply chain, with GB200 and GB300 server shipments expected to increase by 300 percent in the third quarter. Alphabet, Google's parent company, also reignited optimism about AI-related capital expenditures, driving stock market increases in the US and Taiwan. This illustrates a divergence in fortunes within the tech industry between companies that have secured new growth engines like AI and those that haven't. Meanwhile, US Amazon payroll data showed software engineer salaries for H-1B visa foreign workers reaching up to 263,700 dollars, underscoring high demand for tech talent. However, simultaneous widespread layoff announcements raise concerns about labor market changes in the AI era.

The adaptability and liquidity of global financial markets were also observed across several countries. In Spain, despite the European Central Bank (ECB) freezing its key interest rate, Euribor, the interbank interest rate within the Eurozone, continued its downward trend to 2.036 percent, signaling positive news for variable-rate mortgage holders. In contrast, Türkiye's central bank lowered its policy rate by 300 basis points to 43 percent. Yet, investment banks like Morgan Stanley, while expecting further rate cuts by year-end, raised their inflation and exchange rate forecasts. This clearly demonstrates differences in monetary policies based on each country's economic situation. In Spain, hundreds of thousands of pension payers were approved for tax refunds of up to 4,000 Euros after the government suspended repayment procedures, and in Brazil, the third installment of 2025 income tax refunds is set to be disbursed from July 31st, expected to positively impact household finances. In Belgium, approximately 2,300 pension savers found themselves receiving fewer tax benefits, which once again highlights the complexity of pension saving schemes and the importance of individual tax planning.

Changes closely related to consumers' daily lives were also spotted. In Australia, rising living costs led to a 'frugal shopping' controversy, where consumers broke off broccoli stems to reduce weight. One supermarket responded by posting a warning sign, stating 'additional charges apply for damaged broccoli,' starkly illustrating the daily struggles consumers face with increasing living expenses. In the UK, Cadbury launched a new chocolate bar flavor, tantalizing consumer taste buds. In Brazil, Chinese delivery service giant Meituan announced plans to invest 1 billion dollars through its international brand 'Keeta,' entering the Brazilian market from November, showcasing continuous efforts by companies to attract consumers with new products and services. In contrast, an error on Brazil's Olympikus sneaker website, offering discounts of over 80 percent, garnered significant consumer interest but also caused confusion due to order cancellations, revealing the dual nature of online shopping.

Reviewing yesterday's major global news, we once again felt that we are living in an era where diverse challenges and opportunities coexist. Trade wars and technological competition are reshaping corporate strategies, significantly impacting employment and investment. Simultaneously, practical issues like rising living costs present deep concerns for both governments and citizens worldwide. In these complex circumstances, Empathy Keeper believes that our efforts to understand each other's situations and collectively seek solutions are more crucial than ever. For despite our different cultures and economic backgrounds, we all share the common humanity of dreaming of a 'better tomorrow.' Until next time, thank you.