Latest news with #globalgrowth
Daily Mail
4 hours ago
- Business
- Daily Mail
Global economy set for slowest growth since Covid as Trump's trade wars take their toll
The world economy is on course for the slowest growth since the pandemic as Donald Trump's trade wars take their toll, the OECD warned yesterday. The latest forecast from the Paris-based Organisation for Economic Cooperation and Development pointed to growth of just 2.9 per cent this year and next. And Bank of England governor Andrew Bailey gave his strongest comments yet on the impact of Trump's tariff war on global trade, saying it had been 'blown up'. The impact of the disruption was laid bare in separate figures showing China's manufacturing centre went into reverse last month as US tariffs bite. The OECD's forecast for a slowdown would mean world growth falling below 3 per cent for the first time since 2020 – when Covid lockdowns sent business activity into reverse. Back in March it had predicted 3.1 per cent growth in 2025 and 3 per cent in 2026. The US, the world's biggest economy, saw a dramatic downgrade from 2.2 per cent to 1.6 per cent for this year. Britain is expected to grow by 1.3 per cent, down from 1.4 per cent. OECD secretary-general Mathias Cormann said: 'The global economy has shifted from a period of resilient growth and declining inflation to a more uncertain path. Today's policy uncertainty is weakening trade and investment, diminishing consumer and business confidence and curbing growth prospects.' Trump introduced swingeing tariffs on trading partners on 'Liberation Day' at the start of April – before he was forced into a 90-day pause when markets sold off sharply. Separate tariffs have also been introduced covering the likes of steel and cars. UK businesses continue to suffer despite a much-vaunted deal between Britain and the United States – which was announced nearly a month ago but has yet to take effect. It means that a decision by Trump to hike additional tariffs on steel from 25 per cent to 50 per cent will hit British industry despite the promise of relief. Yesterday, Bank governor Bailey highlighted in stark terms the damaging impact that the disarray would have on investment decisions and broader global growth. He told the Commons Treasury select committee: 'The overall picture on trade now, I'm afraid, is one where the rules-based system is dead. 'Over a long time we built up a pattern of world trade agreements which led to a lowering of tariffs. 'I'm afraid that system has now really been blown up to a considerable degree, let's be honest, by all of this. That has very serious consequences for the world economy.'
Japan Times
11 hours ago
- Business
- Japan Times
Trade war cuts global economic growth outlook: OECD
The OECD slashed its annual global growth forecast on Tuesday, warning that U.S. President Donald Trump's tariffs blitz would stifle the world economy — hitting the United States especially hard. After 3.3% growth last year, the world economy is now expected to expand by a "modest" 2.9% in 2025 and 2026, the Paris-based Organisation for Economic Co-operation and Development said. In its previous report in March, the OECD had forecast growth of 3.1% for 2025 and 3.0% for 2026. Since then, Trump has launched a wave of tariffs that has rattled financial markets. "The global outlook is becoming increasingly challenging," said the OECD, an economic policy group of 38 mostly wealthy countries. It said "substantial increases" in trade barriers, tighter financial conditions, weaker business and consumer confidence, and heightened policy uncertainty will all have "marked adverse effects on growth" if they persist. The OECD downgraded its 2025 growth forecast for the United States from 2.2% to 1.6%. The world's biggest economy is expected to slow further next year to 1.5%. Trump, who has insisted that the tariffs would spark a manufacturing revival and restore a U.S. economic "Golden Age," posted on his Truth Social platform before the OECD report's publication: "Because of Tariffs, our Economy is BOOMING!" The OECD holds a ministerial meeting in Paris on Tuesday and Wednesday. U.S. and EU trade negotiators are expected to hold talks on the sidelines of the gathering after Trump threatened to hit the European Union with 50percent tariffs. The Group of Seven advanced economies is also holding a meeting focused on trade. "For everyone, including the United States, the best option is that countries sit down and get an agreement," OECD chief economist Alvaro Pereira said in an interview. "Avoiding further trade fragmentation is absolutely key in the next few months and years," Pereira said. Trump imposed in April a baseline tariff of 10% on imports from around the world. He unveiled higher tariffs on dozens of countries but has paused them until July to allow time for negotiations. The U.S. president has also imposed 25percent tariffs on cars and now plans to raise those on steel and aluminum to 50% on Wednesday. In the OECD report, Pereira warned that "weakened economic prospects will be felt around the world, with almost no exception." He added that "lower growth and less trade will hit incomes and slow job growth." The outlook "has deteriorated" in the United States after the economy expanded by a robust 2.8% last year, the report said. The effective tariff rate on U.S. merchandise imports has gone from 2% in 2024 to 15.4%, the highest since 1938, the OECD said. The higher rate and policy uncertainty "will dent household consumption and business investment growth," the report said. The OECD also blamed "high economic policy uncertainty, a significant slowdown in net immigration and a sizeable reduction in the federal workforce." While annual inflation is expected to "moderate" among the Group of 20 economies to 3.6% in 2025 and 3.2% in 2026, the United States is "an important exception." U.S. inflation is expected to accelerate to just under 4% by the end of the year, two times higher than the Federal Reserve's target for consumer price increases. The OECD slightly reduced its growth forecast for China — which was hit with triple-digit U.S. tariffs that have been temporarily lowered — from 4.8% to 4.7% this year. Another country with a sizeable downgrade is Japan. The OECD cut the country's growth forecast from 1.1% to 0.7%. The outlook for the eurozone economy, however, remains intact at 1% growth. "There is the risk that protectionism and trade policy uncertainty will increase even further and that additional trade barriers might be introduced," Pereira wrote. "According to our simulations, additional tariffs would further reduce global growth prospects and fuel inflation, dampening global growth even more," he said.
CNA
12 hours ago
- Business
- CNA
OECD cuts global GDP forecast amid tariff uncertainties, increase in trade barriers
Trade policy under US President Donald Trump is taking a major toll on global growth. The Organisation for Economic Co-operation and Development has cut its GDP forecast for this year and the next to below 3%. It has warned of an even weaker outlook, should it see a further rise in protectionism. The OECD's chief economist also said a "significant increase in trade barriers" and uncertainty caused will lead to "weakened economic prospects" all around the world. Olly Barratt reports from London.
NHK
14 hours ago
- Business
- NHK
OECD cuts global GDP growth projection to 2.9%
The Organisation for Economic Co-operation and Development has downgraded its growth forecast for the global economy this year to 2.9 percent, citing the impact of tariffs by the administration of US President Donald Trump. The new projection, contained in the OECD's latest economic outlook, is down by 0.2 percentage points from its March projection. The OECD says the forecast is based on the assumption that Trump will maintain the tariff measures he launched up to mid-May. They include additional levies on automobiles, steel and aluminum, as well as a baseline 10-percent duty on countries and regions. The organization forecasts the US economy will grow 1.6 percent this year, down by 0.6 points from the previous projection, as tariffs suppress income increases. The OECD trimmed its growth projection for China by 0.1 point to 4.7 percent, lowered the figure for Japan by 0.4 points to 0.7 percent, and maintained its forecast for the Eurozone at 1 percent. The organization warns if the US raises its tariffs even further, it could promote retaliatory measures by the country's trade partners. It warns that this would cause downward pressure on corporate and household spending around the world.
Free Malaysia Today
15 hours ago
- Business
- Free Malaysia Today
Trade war cuts global economic growth outlook, says OECD
US President Donald Trump has imposed 25% tariffs on cars and now plans to raise those on steel and aluminium to 50% tomorrow. (AP Pic) PARIS : The Paris-based Organisation for Economic Co-operation and Development (OECD) slashed its annual global growth forecast today, warning that US President Donald Trump's tariff blitz will stifle the world economy, hitting the US especially hard. After 3.3% growth last year, the world economy is now expected to expand by a 'modest' 2.9% in 2025 and 2026, the OECD said. In its previous report in March, the OECD had forecast growth of 3.1% for 2025 and 3% for 2026. Since then, Trump has launched a wave of tariffs that has rattled financial markets. 'The global outlook is becoming increasingly challenging,' said the OECD, an economic policy group of 38 mostly wealthy countries. It said 'substantial increases' in trade barriers, tighter financial conditions, weaker business and consumer confidence, and heightened policy uncertainty will all have 'marked adverse effects on growth' if they persist. The OECD holds a ministerial meeting in Paris today and tomorrow, with US and EU trade negotiators expected to hold talks on the sidelines of the gathering after Trump threatened to hit the EU with 50% tariffs. The Group of Seven advanced economies is also holding a meeting focused on trade. 'For everyone, including the US, the best option is that countries sit down and get an agreement,' OECD chief economist Alvaro Pereira said in an interview with AFP. 'Avoiding further trade fragmentation is absolutely key in the next few months and years,' Pereira said. Trump imposed in April a baseline tariff of 10% on imports from around the world. He unveiled higher tariffs on dozens of countries but has paused them until July to allow time for negotiations. The US president has also imposed 25% tariffs on cars and now plans to raise those on steel and aluminium to 50% tomorrow. US slowdown In the OECD report, Pereira warned that 'weakened economic prospects will be felt around the world, with almost no exception'. He added that 'lower growth and less trade will hit incomes and slow job growth'. The outlook is particularly gloomy for the US. 'The US economy is now expected to grow by just 1.6% this year, down from 2.2% in the previous outlook, and slow further to 1.5% in 2026,' the OECD said. 'This reflects the substantial increase in the effective tariff rate on imports and retaliation from some trading partners,' the OECD said. 'The effective tariff rate on US merchandise imports has gone from 2% in 2024 to 15.4%, the highest since 1938,' the OECD said. The OECD also blamed 'high economic policy uncertainty, a significant slowdown in net immigration, and a sizeable reduction in the federal workforce'. While annual inflation is expected to 'moderate' among the Group of 20 economies to 3.6% in 2025 and 3.2% in 2026, the US is 'an important exception'. US inflation is expected to accelerate to just under 4% by the end of the year, two-times higher than the Federal Reserve's target for consumer price increases. Rising risks The OECD slightly reduced its growth forecast for China – which was hit with triple-digit tariffs that have been temporarily lowered – from 4.8% to 4.7% this year. Another country with a sizeable downgrade is Japan, the OECD cut the country's growth forecast from 1.1% to 0.7%. The outlook for the euro zone economy, however, remains intact with 1% growth. 'There is the risk that protectionism and trade policy uncertainty will increase even further and that additional trade barriers might be introduced,' Pereira wrote. 'According to our simulations, additional tariffs would further reduce global growth prospects and fuel inflation, dampening global growth even more,' he said.
