The Trump effect\u00a0<\/strong><\/p>\nThe gloomier projections come as Trump imposed a 10 percent tariff on imports from almost all US trading partners in April as well as higher rates on imports of steel and aluminium. He had initially also announced radically higher rates on dozens of these economies, which he has since suspended until early July.<\/p>\n
Trump\u2019s on-again off-again tariff hikes have upended global trade, increased the effective US tariff rate from below 3 percent to the mid-teens, its highest level in almost a century, and triggered retaliation by China and other countries.<\/p>\n
He also engaged in tit-for-tat escalation with China, although both countries have hit pause on their trade war and temporarily lowered these staggering duties as well. But a lasting truce remains uncertain.<\/p>\n
While the World Bank\u2019s growth downgrade was proportionately larger for advanced economies, the bank cautioned that less wealthy countries have tricky conditions to contend with.<\/p>\n
Commodity prices are expected to remain suppressed in 2025 and 2026, Gill said.<\/p>\n
This means that some 60 percent of emerging markets and developing economies \u2013 which are commodity exporters \u2013 have to deal with a \u201cvery nasty combination of lower commodity prices and more volatile commodity markets\u201d.<\/p>\n
GDP downturn\u00a0<\/strong><\/p>\nBy 2027, while the per capita GDP of high-income economies will be approximately where it was in pre-pandemic forecasts, corresponding levels for developing economies would be 6 percent lower.<\/p>\n
\u201cExcept for China, it could take these economies about two decades to recoup the economic losses of the 2020s,\u201d Gill cautioned.<\/p>\n
\u00a0<\/p>\n
Even as GDP growth expectations have been revised downwards, inflation rates have been revised up, he said, urging policymakers to contain inflation risks.<\/p>\n
Despite trade policy challenges, however, Gill argued that \u201cIf the right policy actions are taken, this problem can be made to go away with limited long-term damage.\u201d<\/p>\n
He urged for the \u201cdifferential in tariff and non-tariff measures with respect to the US\u201d to be quickly reduced by other countries, starting with the Group of 20, which brings together the world\u2019s biggest economies.<\/p>\n
\u201cEvery country should extend the same treatment to other countries,\u201d Gill stressed. \u201cIt\u2019s not enough to just liberalise with respect to the US. It\u2019s also important to liberalise with respect to the others.\u201d<\/p>\n
The World Bank said developing economies could lower tariffs on all trading partners and convert preferential trade deals into pacts spanning the \u201cfull range of cross-border regulatory policies\u201d to boost GDP growth.<\/p>\n
Generally, wealthier countries have lower tariffs than developing countries, which could be seeking to protect budding industries or have fewer sources of government revenue.<\/p>\n
This month, the Paris-based Organisation for Economic Co-operation and Development also slashed its 2025 global growth forecast from 3.1 percent to 2.9 percent, warning that Trump\u2019s tariffs would stifle the world economy.<\/p>\n
This came after the International Monetary Fund in April<\/a> too cut its world growth expectations for this year on the effects of Trump\u2019s levies, from 3.3 percent to 2.8 percent.<\/p>\n","protected":false},"excerpt":{"rendered":"The World Bank has slashed its 2025 global growth forecast, citing trade tensions and policy uncertainty as the…\n","protected":false},"author":2,"featured_media":174293,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[11410,51,1395,32,1700,299,476,3058,72127,1200,1219,16,5664,15,286,24774],"class_list":{"0":"post-174292","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-asia-pacific","9":"tag-business","10":"tag-china","11":"tag-donald-trump","12":"tag-economy","13":"tag-europe","14":"tag-inflation","15":"tag-international-trade","16":"tag-poverty-and-development","17":"tag-tax","18":"tag-trade-war","19":"tag-uk","20":"tag-unemployment","21":"tag-united-kingdom","22":"tag-us-canada","23":"tag-world-bank"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114661911642253212","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/174292","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=174292"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/174292\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/174293"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=174292"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=174292"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=174292"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}