(qlmbusinessnews.com . Mon 20th Jan, 2025) London, UK —
Global Economic Growth Slows to 2.7%: World Bank Raises Concerns
The World Bank has forecast that global economic growth in 2025 will slow to its weakest pace in six years, excluding the dramatic contraction caused by the Covid-19 pandemic. The projected growth rate of 2.7% reflects mounting concerns over the impact of US trade tariffs on international commerce.
According to Ayhan Kose, the bank’s deputy chief economist, while this rate may be “manageable,” it is insufficient to enhance living standards for people in both advanced and developing nations.
The warning follows US President-elect Donald Trump’s plans to impose higher tariffs on imports, a central tenet of his economic agenda. He aims to bolster the US economy by protecting domestic jobs and increasing tax revenues. However, these measures risk significantly disrupting global trade.
The US, the world’s largest importer, sources nearly 40% of its $3.2 trillion (£2.6 trillion) in annual imports from China, Canada, and Mexico. The introduction of tariffs could escalate trade tensions, prompting potential retaliatory measures and amplifying the adverse effects on the global economy.
The World Bank has cautioned that a 10% increase in US tariffs on imports could reduce global growth by 0.2%, even without retaliatory measures. With retaliation, the impact could be much greater.
Mr Kose remarked that restrictions on trade often harm the implementing country most, and heightened economic uncertainty may further erode business confidence and investment.
Global Strategies and Challenges.
Governments worldwide are grappling with various strategies to stimulate economic growth. The UK is investing in artificial intelligence, while the US is focusing on tax cuts and deregulation. Meanwhile, India aims to expand its manufacturing capabilities, and China is boosting consumer spending.
Despite these efforts, Mr Kose warned there are no quick fixes for economic growth, likening the challenge to a medical condition without a miracle cure: “There is no Ozempic for economic growth. Countries need to carefully consider their policies.”
The slow growth rate could hinder progress in reducing poverty, funding public services, and improving living standards, particularly as inflation remains above the 2% targets set by central banks in the UK, US, and eurozone.
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