After the recent escalation of trade disputes, the perspectives for the global economy are increasingly clouding. And the crisis could draw more circles.
The recent turbulence on the financial markets is only one of the signs that the customs shock from the USA increasingly has the global economic expectations eroding. Finally, the economists of the large banking houses have reduced their growth forecasts.
Since the weekend, the major American bank Jpmorgan has put the probability of a global recession at 60 percent this year – after 40 percent. For the United States, this year’s customs increase has been 22 percent of the greatest tax increase since 1968, said chief economist Bruce Kasman and his team. “The effects of this tax increase will probably be reinforced – through retaliation measures, a deterioration in the business climate in the USA and interruptions of the supply chain,” said the economists.
They joined an analysis of the International Monetary Fund (IMF), which, assuming countermeasures from China and Europe, predicts a burden on the US gross domestic product of around two percentage points and global gross domestic product of one percentage point. The latest answer from China has already made this result more likely.
At least the cloudy forecasts meet a recent robust global economy. For the past year, global growth is estimated at around three percent. For this year the IMF predicted 3.3 percent in January.
Third year in Germany?
For Germany, too, the forecasts have recently become much more careful. “In the short period, the new federal government will be difficult to cushion the immediate trade shock,” the economists of Deutsche Bank write in a current analysis.
The previous growth forecast of 0.3 percent for 2025 can turn out to be too optimistic if the US tariffs should prove to be permanent, said the authors Marc Schattenberg and Robin Winkler. “Overall, the economic risks for 2025 are tilted towards a third year of recession in a row.” Europe’s largest economy had already shrunk by 0.3 percent in 2023, and a further 0.2 percent in 2024.
Does the crisis expand to the credit crisis?
It turns out that confidence in the ability of US President Donald Trump has disappeared to capture the spirits he called. Rather, lengthy and hard trading talks are likely to cloud the confidence of the export companies worldwide in the long term.
Experts remind you that such a serious disorder of the world trade could certainly draw further circles. The view here goes primarily to the US bond market, where the risk surcharges for bonds of companies have a significant credit rating (so-called junk bonds) have recently increased significantly. This surcharge for the return of government bonds has recently reached the highest level in six months.
This means that market participants are increasingly concerned with liquidity bottlenecks and payment problems. Beast experts are already expecting a higher failure rate for high -risk bonds. The problem could still be tightened by liquidity problems of large stock exchange participants – especially hedge funds, which take high risks with a lot of debt.
Rescue through the Fed would bring new dangers
Against this background, the markets are now increasingly looking at monetary policy – and especially the US Federal Reserve. Like the economic forecasts, interest expectations are currently moving drastically. Recently, most Fed observers only expected two key interest rates this year. The JPMorgan experts are now starting from an interest step at every session until January – starting in June, even if Fed boss Jerome Powell showed little willingness on Friday. The key interest rate range would drop from currently 4.25 to 4.5 percent to 2.75 to 3.0 percent.
Such interest steps would use the global economy – but at the same time, they would conjure up the risk of stagflation, i.e. stagnating economic output with continued inflation.
All of this indicates a long -term disorder of global economic development. Even if the US President and his advisors should be able to curb the trading turbulence again: the growth prospects will not reach the level again this year before the “Day of Liberation”.
