Latest news with #MAyhanKose
Yahoo
2 days 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
Yahoo
4 days 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
Economic Times
4 days ago
- Business
- Economic Times
World Bank predicts India dhoom amid global gloom
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel New Delhi: The World Bank has lowered India's growth forecast for FY26 to 6.3% from 6.7% estimated in January, though it's projected to remain one of the fastest growing economies globally. The country's FY27 growth is also seen 0.2 percentage point lower at 6.5%, according to the World Bank's latest Global Economic Prospects (GEP) World Bank attributed the reduction in expected growth to weaker export performance on the part of key trade partners and rising global trade growth is also expected to decelerate amid rising global policy uncertainty, the report gross domestic product (GDP) expanded by 6.5% in FY25, according to official data released last month. Last week, the Reserve Bank of India (RBI) retained its 6.5% growth projection for FY26 as it cut the key interest rate by a higher-than-expected half a percentage point to support growth is expected to slow to 2.3% in 2025 compared with 2.7% projected in January, amid the rise in trade barriers and an uncertain policy environment, marking the slowest pace of expansion since 2008, excluding periods of US' growth forecast has been revised downwards to 1.4% in 2025 from 2.3% projected in January by the multilateral lender. China's growth projection remains unchanged at 4.5% in 2025."Emerging-market and developing economies reaped the rewards of trade integration but now find themselves on the frontlines of a global trade conflict," said M Ayhan Kose, World Bank's deputy chief economist and director of the prospects group. "India continues to grow faster than any other major economy."The South Asian region is likely to face a slowdown with growth expected at 5.8% in 2025 compared with an estimated 6% in 2024, due to the impact of rising trade barriers, dampened business confidence and weaker investment, according to the World is then anticipated to increase to an average of 6.2% annually in 2026-27, driven by improving activity in India and elsewhere, aligning with the region's potential estimates, it income growth in South Asia is estimated to stabilise at 5%, on average, over 2025-27, which would further reduce poverty. However, excluding India, per-capita income growth is expected to rise to 3% in 2027 from 2.1% in 2011-12 and 2022-23, nearly 270 million people in India were lifted out of extreme poverty in India, according to the latest data released by the World Bank.
Time of India
4 days ago
- Business
- Time of India
World Bank predicts India dhoom amid global gloom
New Delhi: The World Bank has lowered India's growth forecast for FY26 to 6.3% from 6.7% estimated in January, though it's projected to remain one of the fastest growing economies globally. The country's FY27 growth is also seen 0.2 percentage point lower at 6.5%, according to the World Bank's latest Global Economic Prospects (GEP) report. The World Bank attributed the reduction in expected growth to weaker export performance on the part of key trade partners and rising global trade barriers. Investment growth is also expected to decelerate amid rising global policy uncertainty, the report said. India's gross domestic product (GDP) expanded by 6.5% in FY25, according to official data released last month. Last week, the Reserve Bank of India (RBI) retained its 6.5% growth projection for FY26 as it cut the key interest rate by a higher-than-expected half a percentage point to support growth. Global growth is expected to slow to 2.3% in 2025 compared with 2.7% projected in January, amid the rise in trade barriers and an uncertain policy environment, marking the slowest pace of expansion since 2008, excluding periods of recession. Live Events The US' growth forecast has been revised downwards to 1.4% in 2025 from 2.3% projected in January by the multilateral lender. China's growth projection remains unchanged at 4.5% in 2025. India: A Bright Spot "Emerging-market and developing economies reaped the rewards of trade integration but now find themselves on the frontlines of a global trade conflict," said M Ayhan Kose, World Bank's deputy chief economist and director of the prospects group. "India continues to grow faster than any other major economy." The South Asian region is likely to face a slowdown with growth expected at 5.8% in 2025 compared with an estimated 6% in 2024, due to the impact of rising trade barriers, dampened business confidence and weaker investment, according to the World Bank. Growth is then anticipated to increase to an average of 6.2% annually in 2026-27, driven by improving activity in India and elsewhere, aligning with the region's potential estimates, it added. Per-capita income growth in South Asia is estimated to stabilise at 5%, on average, over 2025-27, which would further reduce poverty. However, excluding India, per-capita income growth is expected to rise to 3% in 2027 from 2.1% in 2025. Between 2011-12 and 2022-23, nearly 270 million people in India were lifted out of extreme poverty in India, according to the latest data released by the World Bank.
