Donald Trump’s trade wars sent global investment tumbling, World Bank says
- World Bank joins the IMF in lowering its forecast over concerns US president’s trade actions will undermine global growth
- The Trump administration and Beijing have imposed tariffs on hundreds of billions of dollars of each other’s imports
The World Bank on Tuesday revised growth forecasts downward for the world for this year as a tit-for-tat tariff war between the United States and China sent global investment tumbling.
The Washington-based lender to developing world countries said in its half-yearly global health check that spiralling political uncertainty was to blame for a slowdown in trade and a collapse in investment spending that will push down GDP growth to 2.6 per cent this year “before inching up to 2.7 per cent in 2020”.
The decision by the Trump administration to impose higher tariffs on Chinese imports and prolonged Brexit uncertainty were among a string of events to increase the World Bank’s policy uncertainty index to a record high.
“Heightened policy uncertainty, including a recent re-escalation of trade tensions between major economies, has been accompanied by a deceleration in global investment and a decline in confidence,” according to the report.
The report’s gloomy findings were echoed in a speech on Tuesday by the US Federal Reserve chair, Jerome Powell, who pledged to take “appropriate” measures to protect the US economy from the impact of trade wars.
In what was widely seen as a hint that the Fed could cut interest rates in the coming months if the US economy cools, Powell told a monetary policy conference in Chicago that the central bank was “closely monitoring the implications” of ongoing trade disputes.