Economists from international economic organizations and financial institutions have raised concerns about potential downside risks to the global economy amid possible policy changes following the impending US government transition.
US President-elect Donald Trump's proposed fiscal and trade policies have added uncertainty to next year's interest rate policies, with markets widely anticipating that this could hinder the rate cut process, according to a recent report by Singaporean newspaper Lianhe Zaobao.
In an outlook note, Morgan Stanley economists predict that the change in power in Washington and the anticipation of hawkish trade policies are likely to dampen consumer spending in the coming years.
\"The outcome of the US election is going to usher in policy changes with implications that will reverberate through the global economy,\" wrote Morgan Stanley's Chief Global Economist Seth Carpenter.
Carpenter added that the initial round of tariffs from the new administration will primarily target imports from the Chinese mainland, followed by a gradual expansion to goods from other countries. As sellers pass on increased costs to consumers in the form of price hikes, inflation is expected to rise in the second half of 2025, leading to reduced consumer spending, ultimately affecting production and employment.
Goldman Sachs Research last month forecasted that the average annual global GDP growth rate for 2025 will be 2.7 percent, slightly above the consensus forecast of economists surveyed by Bloomberg.
While optimism towards global economic growth is partly due to the alleviation of inflation over the past two years, US trade policies could present economic headwinds to other regions, according to Goldman Sachs Chief Economist Jan Hatzius.
\"The biggest risk is a large across-the-board tariff, which would likely hit growth hard,\" Hatzius wrote.
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Economists: US policy changes likely to impact global growth
cgtn.com
