Global economic growth is at its worst level in three years thanks to Donald Trump's trade wars, the World Bank says
- Global investment, economic growth, and business confidence have dropped to three-year lows this year, the World Bank said in a report published Tuesday.
- US President Donald Trump's trade wars have largely contributed to the global slowdown, the report said.
- The World Bank also attributed global slowdown to "renewed financial turmoil in emerging and developing economies" and "a more abrupt deceleration of economic growth."
- Trump is fighting trade wars on multiple fronts, including a tit-for-tat tariff battle with China, the threat of new tariffs on the European car industry, and a threat to impose a 5% tax on all US imports from Mexico in an attempt to curb migration.
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US President Donald Trump's trade wars have caused so much uncertainty that the global economy is moving at its slowest pace in three years, the World Bank says in a new report.
Global economic growth is expected to slow to 2.6% this year, the World Bank said in its semiannual Global Economic Prospects report. Specifically, advanced economies are expected to grow by 1.7%, and emerging-market and developing economies by 4%.
The report, published Tuesday, is titled "Heightened Tensions, Subdued Investment."
Business confidence across major advanced and developing economies in April was also at its lowest point since April 2016, according to the World Bank's analysis.
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Global investment spending has also tumbled, the bank said, noting that "additional government borrowing might also appear to be an attractive option for financing growth-enhancing initiatives such as investment in human and physical capital."
"Of particular concern is a slowdown in global trade growth to the lowest level since the financial crisis ten years ago and a tumble in business confidence," the report said.
The World Bank did not cite one particular reason for the global slowdown but noted "turbulence and uncertainty that afflicted a number of countries late last year and this year."
It also warned that "a further escalation of trade disputes between the world's largest economies, renewed financial turmoil in emerging and developing economies, or a more abrupt deceleration of economic growth among major economies than is currently envisioned" could jeopardise further economic growth.
The Trump administration is waging trade wars on multiple fronts: It's engaged in a tit-for-tat tariff battle with China and has also announced plans to apply 5% tariffs on all imports from Mexico.
Last month the White House delayed by six months a decision to impose steep tariffs on cars entering the US, a decision that surely would have seen the European Union retaliate with its own tariff list against the US, Bloomberg reported.
The World Bank said it expected the pace of economic growth to eventually stabilise but warned that the world economy could still be vulnerable if those risks persisted or worsened.
The report came as the US Federal Reserve hinted it might cut interest rates later this year, with Fed Chairman Jerome Powell vowing Tuesday to "act as appropriate" to adjust to US-China trade negotiations.
Global stocks, US futures, and US equities jumped after Powell's statement, with analysts suggesting that it indicated central banks' willingness to help markets to maintain economic growth, Business Insider's Theron Mohamed reported.
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