Getty ImagesThe World Bank has warned that the global economy is set to grow at its slowest pace in six years this year amid fears of trade damage from US tariffs.
Growth of 2.7 percent would be the weakest performance since 2019, barring the sharp contraction seen at the height of the Covid pandemic.
According to the bank’s deputy chief economist Ihan Kos, this is a rate the world can “live with”, but will not be enough to improve the living standards of people in both rich and poor countries.
He warned that the tariffs, which President-elect Donald Trump has threatened to impose on US imports, could have global economic consequences.
Many world leaders are likely to introduce higher tariffs on imports into the US because they would make it more expensive for companies to sell their goods in the world’s largest economy.
Tariffs are a central part of Trump’s economic vision — he sees them as a way to grow the U.S. economy, protect jobs and raise tax revenues — and he plans to impose tariffs on China, Canada and Mexico on his first day in office next week. Threatened to release.
The US is the world’s largest importer. According to official figures, China, Mexico and Canada account for around 40% of the $3.2 trillion (£2.6tn) worth of goods imported each year.
“Elevated trade tensions between major economies” is one of the bank’s biggest fears for the global economy in 2025, Mr Koos said. The World Bank aims to promote long-term economic growth.
Other concerns include interest rates being held too long and increased policy uncertainty undermining business confidence and investment.
Even a 10 percent increase in U.S. tariffs on imports from each country would reduce global economic growth by 0.2 percent if countries do not retaliate, the World Bank said. If they do, the global economy could be severely damaged, Mr Kos added.
He said that whenever you impose restrictions on trade, there will be negative consequences which are often borne by the country that introduced them.
Mr Koss said the low growth forecast for the global economy in 2025 meant that living standards would “not improve at the pace we have seen in the past”.
He pointed out that the average growth rate in the decade before the pandemic was more than 3 percent per year.
“When you look at the long term, we think the growth numbers will slow down. That worries us,” he added.
Economic growth is seen as fundamental to reducing poverty and funding public services such as health care and education.
It is also key to creating jobs and boosting wages, at a time when inflation is above the 2% target set by central banks in the eurozone, the UK and the US.
Governments around the world are grappling with different ways to boost economic growth, and Mr Koss cautions that there is no magic solution.
“The most important thing is that there is no Olympic for economic growth,” he said.
Britain has a government. Looking at the artificial intelligence industry.In the US, Trump wants to cut taxes and reduce regulation.
Expanding manufacturing capacity is India’s priority, but China is taking steps to do so. Increase in consumer spending.