emerging
Global Growth Moderation
Global economic growth is expected to moderate, particularly in the Euro area and China, due to trade policy uncertainty and the impact of US tariffs.
Timeframe
near-term
Subcategories
Impact areas
Detailed Analysis
The report forecasts a moderation in global economic growth, particularly impacting the Euro area and China. Trade policy uncertainty stemming from the US election is cited as a significant factor, particularly for the Euro area. "We have cut our Euro area GDP forecast to a below-consensus 0.8%, reflecting ongoing structural headwinds and a hit from trade policy uncertainty." In China, the projected growth slowdown is directly linked to the anticipated increase in US tariffs. While China is expected to respond with macroeconomic stimulus and currency depreciation, the impact of the tariffs is still expected to be substantial.
Context Signals
Research suggesting a rise in trade policy uncertainty could subtract 0.9% from Euro area GDP.
China's expected response with macro stimulus and RMB depreciation.
Potential for further downgrades to growth forecasts if the trade war escalates.
Edge
European companies with significant exposure to US markets may seek to relocate production or diversify their customer base.
China may accelerate its efforts to develop domestic demand and reduce reliance on exports to the US.
The negative impact on global growth could lead to increased calls for international cooperation on trade policy.
