The global economy will see the slowest decade for global growth since the 1960s as the effect of Donald Trump's tariffs are felt, the World Bank has predicted. Nearly two thirds of countries in the world had their growth forecasts cut from the bank's last set of predictions six months ago. The bank predicts global growth of only 2.3% in 2025, which is 0.4% lower than was forecast in January, and for 2027, it predicts growth of 2.6% Japan, Europe and the US were among those downgraded in the bank's twice yearly report. The bank's last set of forecasts in January were made before Donald Trump took office. Since then, his introduction of a universal 10% tariff on all imports into the US, as well as higher tariffs on steel and aluminium, caused financial markets to plunge in early April. A trade ruling found the bulk of his global tariffs to be illegal in May, although the Trump administration won an appeal to keep them in place for now. The World Bank downgraded its growth forecast for the US in both 2025 and 2026, because of escalating trade tensions rattling investor confidence as well as private consumption. However, it not downgrade the US's main rival, China, which the bank said had enough financial stability to weather the "significant headwinds" from global political uncertainty. "Against the backdrop of heightened policy uncertainty and increased trade barriers, the global economic context has become more challenging," the report said, adding that more "sentiment-sapping policy uncertainty" would come because of the potential for "further rapid shifts" in trade-restrictive moves by countries. The bank said there would be further cuts in growth if the US increased tariffs, and warned of rising inflation. Tariffs could lead to "global trade seizing up in the second half of this year, accompanied by a widespread collapse in confidence, surging uncertainty and turmoil in financial markets," the report said. However, it stopped short of predicting a global recession, saying the chances of that were less than 10%. The report comes after theOECD also downgradedits outlook for the world economy. It said global growth is now expected to slow to a "modest" 2.9%, down from a previous forecast of 3.1%. In the mean time, anew round of talksaimed at resolving the trade war between the US and China has taken place in central London.
World Bank predicts worst decade for global growth since 60s
TruthLens AI Suggested Headline:
"World Bank projects slowest global growth in decades due to trade tensions"
Bbc News
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TruthLens AI Summary
The World Bank has forecasted that the global economy is set to experience its slowest growth in decades, predicting a mere 2.3% growth rate by 2025, which marks a 0.4% reduction from previous estimates made just six months ago. This downturn in economic projections is largely attributed to the impacts of tariffs imposed by the Trump administration, which include a universal 10% tariff on all imports and additional tariffs on steel and aluminum. These trade policies have led to a decline in financial market confidence, resulting in revised growth forecasts for nearly two-thirds of the countries worldwide, including major economies like Japan, Europe, and the United States. The World Bank's report highlights a climate of heightened policy uncertainty and increased trade barriers, suggesting that such conditions are likely to further undermine global economic stability and investor sentiment.
In addition to the downgrading of growth forecasts for the US, the World Bank did not adjust its outlook for China, which it claims possesses sufficient financial resilience to navigate the challenges posed by geopolitical tensions. The bank warned that escalating tariffs could exacerbate existing economic vulnerabilities, potentially leading to a significant slowdown in global trade and surging inflation. Despite these troubling forecasts, the World Bank has refrained from predicting an outright global recession, estimating the probability of such an event to be less than 10%. This cautious stance is echoed by the OECD, which recently revised its global growth outlook down to 2.9% from an earlier prediction of 3.1%. As the trade war between the US and China continues to unfold, new negotiations have been initiated in London, reflecting ongoing efforts to address these critical economic challenges.
TruthLens AI Analysis
The World Bank's prediction of the slowest decade for global growth since the 1960s indicates significant concerns regarding the current economic climate. The report highlights the impact of trade tensions, particularly those stemming from policies introduced during Donald Trump's presidency. By downgrading growth forecasts for major economies like the US, Japan, and Europe, the World Bank paints a bleak picture of the future, which may serve to influence public perception and policymaking.
Economic Sentiment and Public Perception
The release of this report is likely aimed at shaping public sentiment regarding the current economic environment. By emphasizing a forecast of slow growth and potential inflation, the World Bank might be trying to alert both policymakers and the public to the seriousness of escalating trade tensions and their ramifications. This could lead to a heightened sense of urgency for governments to address these economic challenges.
Information Suppression and Hidden Agendas
While the report primarily focuses on growth forecasts, it may downplay other significant factors such as the resilience of certain economies, particularly China. This selective emphasis might lead to a narrative that creates fear and uncertainty, potentially overshadowing positive developments in other regions. The omission of a more balanced perspective could suggest an intention to steer the narrative towards a more pessimistic view of global economics.
Trustworthiness and Manipulative Elements
The report's manipulative potential lies in its tone and the framing of economic data. By using phrases like "significant headwinds" and "policy uncertainty," the World Bank's language could evoke fear among investors and the general public. While the data presented is based on economic forecasts, the manner in which it is conveyed could contribute to a sense of panic.
Comparative Context and Connections
When compared to other economic reports, this announcement aligns with a broader trend of highlighting economic instability linked to political decisions. This connection to ongoing global trade disputes adds context and reinforces the sense of urgency surrounding the issue. Such patterns in reporting can create a narrative that suggests a direct link between political decisions and economic outcomes, fostering a particular perspective among readers.
Potential Impact on Markets and Economies
The predictions of slow growth and inflation could have significant implications for global markets. Investors may react by adjusting their portfolios to mitigate perceived risks, particularly in sectors heavily reliant on international trade. Stocks in industries such as manufacturing, which are sensitive to tariff changes, may experience volatility as a result of this report.
Geopolitical Relevance
The implications of this report extend beyond mere economic forecasts; it reflects the shifting power dynamics in global trade. With rising tensions and tariffs, the economic balance among nations is at risk, which could reshape international relations and trade agreements.
Artificial Intelligence and Reporting
While it is difficult to ascertain whether AI was explicitly used in drafting this report, the structured presentation of data suggests an influence of data-driven analysis. AI models may have been involved in analyzing trends and predicting outcomes, although the emotional tone is likely shaped by human writers aiming to convey urgency.
In conclusion, the World Bank’s report serves to highlight significant challenges facing the global economy while simultaneously influencing public sentiment and investor behavior. Its emphasis on negative growth forecasts may be part of a broader strategy to call attention to urgent policy reforms needed to stabilize the economy.