{"id":76609,"date":"2025-10-12T23:16:07","date_gmt":"2025-10-12T23:16:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/76609\/"},"modified":"2025-10-12T23:16:07","modified_gmt":"2025-10-12T23:16:07","slug":"global-economy-defies-trumps-trade-war-but-cracks-in-the-foundation-emerge","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/76609\/","title":{"rendered":"Global economy defies Trump\u2019s trade war but \u2018cracks in the foundation\u2019 emerge"},"content":{"rendered":"

Unlock the White House Watch newsletter for free<\/p>\n

Your guide to what Trump\u2019s second term means for Washington, business and the world<\/p>\n

The global economy is proving more resilient than expected, despite the ferocity of Donald Trump\u2019s trade war, but geopolitical turmoil and depressed business confidence risk sapping growth, according to research for the Financial Times.<\/p>\n

Real activity in advanced economies is at its firmest in nearly three years, despite the shock of the US president\u2019s tariffs, according to the latest findings of the Brookings-FT Tracking Indexes<\/a> for the Global Economic Recovery, or Tiger.<\/p>\n

Expansion has been driven in part by households and businesses bringing forward spending and investment before US tariffs<\/a> took effect. A surge of investment in artificial intelligence and related technologies has helped sustain US growth in particular. <\/p>\n

But Eswar Prasad, a senior fellow at the Brookings Institution, warned of \u201ccracks in the foundation\u201d, including a disconnect between buoyant stock markets<\/a> and threats to the growth outlook.\u00a0<\/p>\n

The research reveals \u201can economic landscape that looks benign but remains unsettled, with household and business confidence weighed down by trade policy uncertainty, political upheaval in many countries, and geopolitical volatility,\u201d Prasad said.\u00a0<\/p>\n

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The findings come as policymakers and economists prepare to gather for the IMF and World Bank\u2019s annual meetings in Washington that start on Monday. <\/p>\n

Underscoring the geopolitical volatility, Trump on Friday warned he was considering a \u201cmassive increase\u201d in US tariffs on China because of its decision to impose sweeping export controls <\/a>on critical minerals.\u00a0<\/p>\n

Speaking ahead of the meetings, IMF managing director Kristalina Georgieva said the fund sees global growth slowing \u201conly slightly this year and next\u201d, with all signs pointing to \u201ca world economy that has generally withstood acute strains from multiple shocks\u201d.<\/p>\n

This was the result of a private sector that has proven more adaptable than expected to the new trade order, while the impact of tariffs has been less severe than initially feared when Trump announced his \u201cliberation day\u201d package of levies in April. Financial conditions have remained supportive because of skyrocketing equities. <\/p>\n

The US trade-weighted tariff rate has fallen from 23\u00a0per cent in April to 17.5\u00a0per cent now, the IMF calculates. US GDP increased at an annualised rate of 3.8 per cent<\/a> in the three months to the end of June. <\/p>\n

But Georgieva voiced concerns about risk factors including the potential for a sharp correction in equity markets as the AI boom pushes valuations towards dotcom bubble levels.\u00a0<\/p>\n

\u201cFinancial markets, which were initially spooked by America\u2019s erratic trade policies, are forging ahead, with equity indices across the world scaling new highs even as growth prospects weaken,\u201d said Prasad.<\/p>\n

\u201cPolicymakers need to use this time of relative calm to push forward with reforms and disciplined policies that will improve their economies\u2019 resilience in the face of greater volatility engendered by the breakdown of the rules-based order,\u201d he added.<\/p>\n

Underscoring the threats to growth, the Tiger index revealed persistently moribund household and business confidence readings in advanced economies, even as sentiment remains above longer-term averages in emerging markets.\u00a0<\/p>\n

While global economic activity has continued to trend higher, the research highlighted early signs of a slowdown in US indicators, alongside a sluggish performance in China.<\/p>\n

\u201cThe US economic expansion is losing steam as the Trump administration\u2019s erratic trade policies, harsh attitudes towards immigration, and cuts in social expenditures take a toll on growth and employment,\u201d said Prasad.\u00a0<\/p>\n

\u201cWhile the probability of a recession remains low, aggregate indicators have thus far masked manufacturing sector weakness and the labour market looks less robust than it had appeared just a couple of months ago.\u201d<\/p>\n

Indicators for the Eurozone signal lukewarm prospects, he added, with Germany facing the potential for a third consecutive year of contraction and France grappling with an ongoing political crisis that has shaken faith in its public finances.\u00a0<\/p>\n

Growth in real activity in the UK has remained positive but the prospect of another tough Budget from chancellor Rachel Reeves on November 26 is weighing on sentiment.\u00a0UK GDP growth slowed to just 0.2 per cent<\/a> in the three months to July, while inflation \u2014 at 3.8 per cent in August \u2014 has remained well above the Bank of England\u2019s 2 per cent target.<\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the White House Watch newsletter for free Your guide to what Trump\u2019s second term means for Washington,…\n","protected":false},"author":2,"featured_media":76610,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,61,60],"class_list":["post-76609","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-ie","tag-ireland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/76609","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=76609"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/76609\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/76610"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=76609"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=76609"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=76609"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}