International economists are expressing concern over potential risks to global economic growth due to anticipated policy changes as the United States prepares for a government transition.
According to a recent report by Singapore’s Lianhe Zaobao newspaper, fiscal and trade policies proposed by US President-elect Donald Trump have heightened uncertainty around next year’s interest rate policies. The market broadly believes that these policies may hinder the process of rate cuts.
In an outlook note, economists at Morgan Stanley predict that the change in power in Washington and the anticipation of more aggressive trade policies are likely to weigh on 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 Seth Carpenter, Morgan Stanley’s Chief Global Economist.
Carpenter indicated that the first round of tariffs from the new administration will mostly target imports from China, followed by a gradual expansion to goods from other countries. As sellers pass on increased costs to consumers through higher prices, inflation is expected to pick up in the second half of 2025. This inflationary pressure could lead to reduced consumer spending, which in turn may affect production and employment.
Goldman Sachs Research recently 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 toward global economic growth is partly due to the alleviation of inflation over the past two years, US trade policies could introduce economic headwinds to other regions, according to Jan Hatzius, Chief Economist at Goldman Sachs.
“The biggest risk is a large across-the-board tariff, which would likely hit growth hard,” Hatzius wrote.
As global markets brace for potential shifts in US policy, economists underscore the importance of monitoring these developments closely, given their far-reaching impact on the global economic landscape.
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Economists: US policy changes likely to impact global growth
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