S&P Global Ratings Slashes Global Growth Forecasts Due to Trade Tariffs
Global economic growth projections are being lowered by S&P due to concerns over trade wars
Say goodbye to those rosy economic projections, because global growth is taking a hit, according to S&P Global Ratings. The top-tier ratings agency has slashed its predictions for global growth, warning that US trade tariffs will drag down economic activity for the next few years.
In a blunt statement, the agency indicated that a "seismic and uncertain shift in US trade policy" would make global economic output 0.3 percentage points weaker for 2023 and 2024. All regions will experience negative impacts.
But that's not all—S&P analysts warned that growth forecasts could plummet even further. They explained, "The risks to our baseline remain firmly on the downside in the form of a stronger-than-anticipated spillover from the tariff shock to the real economy. The longer-term configuration of the global economy, including the role of the US, is also less certain."
Unexpectedly, the short-term economic outlook for the UK looks somewhat promising, with S&P now expecting a 0.9% growth rate for 2023. However, it also expects 0.2 percentage points less growth next year, estimating 1.4% in 2024.
Trump's tariffs are expected to negatively affect global output, as revealed by S&P.
Trade War Impact on Major Economies
- US: S&P lowered its 2023 US growth forecast from 2.1% to 1.5% but slightly increased its 2028 projections by 0.1 percentage points.
- Eurozone: The growth forecast for 2025 and 2026 was reduced by 0.1 and 0.2 percentage points, respectively. Germany is expected to take the hardest hit among major economies in the Eurozone.
- India: India's growth forecast for 2023 and 2024 was trimmed by 0.2 percentage points for both years.
- Canada: S&P revised the growth outlook for 2023 and 2024 downwards by 0.1 percentage points and 0.2 percentage points, respectively.
- China: S&P lowered its 2025 and 2026 growth projections for China by 0.2 percentage points and 0.1 percentage points, respectively.
S&P analysts chalked up their revised numbers to both the direct and indirect effects of tariffs, explaining that the indirect effects via the uncertainty channel are often larger than the direct effects on profits and prices.
So buckle up, folks, because the ride just got a whole lot bumpier. If you're looking for greener pastures, it might be time to consider diversifying your investments away from the global economy.
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- The seismic shift in US trade policy, as highlighted by S&P Global Ratings, could potentially harm the global economy's growth.
- Tariff impacts are cautioned to affect most regions, with S&P Global Ratings forecasting a 0.3 percentage point decrease in global economic output for 2023 and 2024.
- As a result of these tariff concerns, analysts at S&P Global Ratings suggest that the downside risks for growth projections remain prominent.
- To mitigate potential losses from global downturns, investors might want to contemplate diversifying their investments, such as considering platforms like Trading 212.
