Take Two: China’s GDP growth slows; Japan’s Nikkei hits record high

What do you need to know?

China’s economy expanded by 4.8% in the third quarter (Q3) - its weakest pace in a year and down from 5.2% in Q2 – amid ongoing trade tensions with the US and property market challenges. Overall, China’s government is targeting growth of around 5% for 2025. Resilience in exports helped to avoid a sharper slowdown, rising 8.3% year-on-year in September. Last week China’s Communist Party held its fourth plenum where participants discussed the 15^th five-year plan for economic and social development. Among other areas, the government intends to focus on technological self-reliance, national security and the green transition. 

Around the world

Japan’s Nikkei stock market index hit a record high last week reflecting investor optimism over the election of new Prime Minister, Sanae Takaichi, who is expected to consider a new economic stimulus package. Year to date, the index has surged more than 27%.* Meanwhile, Japanese business activity grew at its slowest rate in five months in October, the flash Purchasing Managers’ Index (PMI) showed. The composite index, which includes manufacturing and services, eased to 50.9 from 51.3 in September – a reading above 50 indicates expansion. Elsewhere, the Eurozone composite PMI rose to 52.2 in October, a 17-month high, from 51.2 the month before.

* In US dollar terms. Source: FactSet, as of 23 October 2025

Figure in focus: $1.2trn

Trade tariffs are projected to cost global businesses at least an additional $1.2trn this year, with around two thirds of the costs being passed onto consumers via higher prices, according to data provider S&P Global. Since 1 January, 2025 revenue forecasts have risen by $600bn while earnings expectations have fallen by $300bn, S&P said – suggesting firms are giving up profit margins to offset rising costs. However, the impact on profits is expected to be a temporary shock with expectations of “successful cost mitigation, not structural decline” and that company profit margins will largely recover by 2027.

Words of wisdom

Lithium iron phosphate battery: Also known as lithium-ferro phosphate (LFP) batteries, these are a type of rechargeable battery used in energy grid storage and electric vehicles due to their low cost, long lifecycle and resistance to overheating. New long-term energy storage projects using LFP batteries are being planned in markets around the world including in Japan, the UK, Canada and Italy, according to BloombergNEF. Overall, global energy storage capacity additions are expected to grow 23% this year, reaching a new record, it said. China will account for more than half the extra installations, followed by the US.

What’s coming up?

Monetary policy is in focus this week, with several central banks convening to set interest rates. The Federal Reserve (Fed) and Bank of Canada each meet on Wednesday – at its last meeting, the Fed cut interest rates by 25 basis points to 4.0%-4.25%. On Thursday the Bank of Japan and European Central Bank (ECB) follow with their own monetary policy meetings – the ECB opted to leave interest rates unchanged at 2.0% in September. In terms of economic data, the Eurozone issues its flash Q3 GDP growth data on Thursday and a flash inflation estimate on Friday.