Latest news with #IndermitGill
Yahoo
16 hours ago
- Business
- Yahoo
Trump's trade war could drag global economic growth to the lowest since the 1960s, World Bank says
The World Bank warns the 2020s may see the weakest economic growth since the 1960s. The organization cites tariffs as a major factor that could hinder global GDP growth. Restoring trade relations, reducing fiscal deficits, and boosting employment are key to raising growth. The 2020s could be the weakest decade for economic growth since the 1960s, the World Bank said in a report on Tuesday. The culprit for the potential bout of sluggish expansion? Tariffs, the organization said. "Only six months ago, a 'soft landing' appeared to be in sight: the global economy was stabilizing after an extraordinary string of calamities both natural and man-made over the past few years. That moment has passed," wrote World Bank Chief Economist Indermit Gill and Deputy Chief Economist M. Ayhan Kose in the report. The economists continued: "This year alone, our forecasts indicate the upheaval will slice nearly half a percentage point off the global gross domestic product (GDP) growth rate that had been expected at the start of the year, cutting it to 2.3 percent. That's the weakest performance in 17 years, outside of outright global recessions. By 2027, global GDP growth is expected to average just 2.5 percent in the 2020s—the slowest pace of any decade since the 1960s." Gill and Kose laid out three ways to boost growth from current projections. One would be to restore trade relations. Global GDP this year and next would be 0.2% higher if tariffs dropped by half from their May 2025 levels, the economists said. Second, governments need to rein in fiscal deficits. "In the era of easy money that preceded the COVID-19 pandemic, governments opted to take too many risks for far too long," Gill and Kose wrote. "The bill is now due: fiscal deficits so far in the 2020s have averaged nearly 6 percent in developing economies, the highest level of this century. Interest costs alone account for about a third of the deficits." Finally, governments, particularly those in developing economies, should focus on job growth. Working-age populations in regions like South Asia and sub-Saharan Africa are expected to rise by hundreds of millions, the economists said. The World Bank joins the Organization for Economic Co-operation and Development in dropping GDP forecasts. OECD now sees 1.6% growth in the US in 2025 instead of 2.6%. Federal Reserve forecasts for US GDP growth are also lackluster. The central bank's Federal Open Market Committee sees a median of 1.7% growth in 2025 and 1.8% growth in the "long run," though the projections were made before many of Trump's tariff proposals. Trump's 90-day pause of his "Liberation Day" tariffs will end on July 9. Countries have been meeting with the Trump administration to renegotiate current trade deals in an effort to avoid the proposed steep import duties on their goods. The jury is still out on how tariffs are affecting the US economy. Consumers and small businesses have reported heightened uncertainty, but the labor market has so far held up, adding 139,000 jobs in May. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Daily Mail
a day ago
- Business
- Daily Mail
World Bank issues grim economic forecast, citing Trump's trade wars
The World Bank has slashed its forecasts for the US economy in the wake of President Donald Trump's tariffs. The bank cut its forecast for US growth in 2025 from its January prediction of 2.3 percent down to 1.4 percent. Economists said 'a substantial rise in trade barriers' — referring to Trump's aggressive trade policies — were to blame for the downgrade. The new predictions suggest the US will grow half as fast as it did last year when it hit 2.8 percent. The consequences will hit everyday Americans hard. A sluggish economy typically leads to slower job growth or layoffs, like those already underway at Walmart, General Mills, and Microsoft. Stocks could also fall, hitting regular Americans' 401(K)s and investments. The World Bank, which provides grants and low-rate loans to poor economies, also pared back its expectations for global growth, dropping it 2025 forecast from 2.7 percent to 2.3 percent. World Bank chief economist Indermit Gill (pictured) said the global economy has now missed its chance for a 'soft landing,' the best possible outcome of lowering inflation without causing a recession. 'The world economy today is once more running into turbulence,' Gill wrote in the Global Economic Prospects report. 'Without a swift course correction, the harm to living standards could be deep,' he warned. The polices have caused many countries to impose reciprocal tariffs on US goods. The result is higher prices for ordinary Americans as retailers pass on the increased costs to consumers. American consumers are already feeling the bite with the cost of cars rising and major grocery chain's such as Walmart raising their prices. Last week the Organization for Economic Co-operation and Development also warned that the US and global economies are headed for a downturn because of Trump's trade policies. The Paris-based organization slashed its growth forecast for the year down to 2.9 percent compared to 3.3 percent last year. The group, which is comprised of 38 wealthy nations, said protectionism is also driving up inflation. The OECD said inflation will tick up in the US this year, likely preventing the Fed from cutting rates until 2026.
Yahoo
2 days ago
- Business
- Yahoo
World Bank sharply downgrades forecast for global economic growth to 2.3%
US President Donald Trump's trade wars are expected to slash economic growth this year in America and around the world, the World Bank forecast. Citing 'a substantial rise in trade barriers' but without mentioning Mr Trump by name, the 189-country lender predicted that the US economy – the world's largest – would grow half as fast (1.4%) this year as it did in 2024 (2.8%). That marks a downgrade from the 2.3% US growth it had forecast back for 2025 back in January. The bank also lopped 0.4 percentage points off its forecast for global growth this year. It now expects the world economy to expand just 2.3% in 2025, down from 2.8% in 2024. In a forward to the latest version of the twice-yearly Global Economic Prospects report, World Bank chief economist Indermit Gill wrote that the global economy has missed its chance for the 'soft landing' – slowing enough to tame inflation without generating serious pain – it appeared headed for just six months ago. 'The world economy today is once more running into turbulence,' Mr Gill wrote. 'Without a swift course correction, the harm to living standards could be deep.'
The Hindu
2 days ago
- Business
- The Hindu
World Bank cuts India's FY26 growth forecast to 6.3% on subdued exports, investments
The World Bank has cut its growth forecast for India to 6.3% in the current financial year 2025-26 from the 6.7% it had projected in January, citing dampened export and investment growth. This 0.4% point cut in India's growth forecast is in line with an equivalent reduction in the global growth forecast to 2.3%. Also Read | Extreme poverty in India down to 5.3% in 2022-23: World Bank The World Bank's new forecast for India — included in the June 2025 update of its Global Economic Prospects report released on Tuesday (June 10, 2025) in Washington — is lower than the 6.5% growth for 2025-26 that the Reserve Bank of India had predicted in its latest monetary policy announcement on June 6. 'India is projected to maintain the fastest growth rate among the world's largest economies, at 6.3% in FY 2025-26,' the report said. 'Nevertheless, the forecast for growth in FY 2025-26 has been downgraded by 0.4 percentage point relative to January projections, with exports dampened by weaker activity in key trading partners and rising global trade barriers.' 'Investment growth is expected to slow, primarily reflecting a surge in global policy uncertainty,' it added. However, the World Bank also predicted that growth is expected to rise again in the next two years (FY27 and FY28) to 6.6 percent a year, on average, partly supported by robust services activity that is likely to enable a revival in export growth. 'Activity has moderated in India—South Asia's largest economy—largely reflecting a slowdown in industrial production, offsetting steady services activity and the recovery in agricultural output,' the report added. Regarding global growth, the World Bank noted that heightened trade tensions and policy uncertainty are expected to slow global growth this year to its slowest pace since 2008, not counting outright global recessions. 'This year alone, our forecasts indicate the upheaval will slice nearly half a percentage point off the global gross domestic product (GDP) growth rate that had been expected at the start of the year, cutting it to 2.3%,' World Bank Chief Economist Indermit Gill wrote in a blog post that accompanied the report. 'That's the weakest performance in 17 years, outside of outright global recessions,' he added. 'By 2027, global GDP growth is expected to average just 2.5% in the 2020s—the slowest pace of any decade since the 1960s.'
South Wales Guardian
2 days ago
- Business
- South Wales Guardian
World Bank sharply downgrades forecast for global economic growth to 2.3%
Citing 'a substantial rise in trade barriers' but without mentioning Mr Trump by name, the 189-country lender predicted that the US economy – the world's largest – would grow half as fast (1.4%) this year as it did in 2024 (2.8%). That marks a downgrade from the 2.3% US growth it had forecast back for 2025 back in January. The bank also lopped 0.4 percentage points off its forecast for global growth this year. It now expects the world economy to expand just 2.3% in 2025, down from 2.8% in 2024. In a forward to the latest version of the twice-yearly Global Economic Prospects report, World Bank chief economist Indermit Gill wrote that the global economy has missed its chance for the 'soft landing' – slowing enough to tame inflation without generating serious pain – it appeared headed for just six months ago. 'The world economy today is once more running into turbulence,' Mr Gill wrote. 'Without a swift course correction, the harm to living standards could be deep.'
