Thu, 16 Jan 2025

Global growth forecast to flatline as tariffs add to strains

The World Bank predicts global economic growth of 2.7% this year amid concerns living standards will struggle to improve.

* The global economy is expected to grow at a rate of 2.7% in 2025, which would be its joint weakest performance since 2019.
* This growth rate is considered "liveable" by the World Bank's deputy chief economist Ayhan Kose, but it will not improve living standards in both rich and poor countries.
* The main concerns for the global economy are: + Fresh US tariffs on imports, which could have worldwide economic consequences + Higher interest rates being kept for longer + Increased policy uncertainty denting business confidence and investment
* A 10% increase in US tariffs on imports from every country would reduce global economic growth by 0.2%, if countries do not retaliate.
* If countries do retaliate, the global economy could be hit harder.
* The low growth rate being forecast for 2025 means that living standards will not improve at the pace seen in the past.
* Economic growth is considered fundamental to reducing poverty and funding public services such as healthcare and education.
* There are no magic solutions to boost economic growth, according to Ayhan Kose.
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