Global investment is at its worst level for 3 years thanks to Trump's trade wars, World Bank says

trump xi china trade war 2x1

Oliver Contreras/Getty; Greg Baker/Getty; Shayanne Gal/Business Insider

US President Donald Trump and Chinese President Xi Jinping have ramped up their trade war, which has affected global business confidence.

  • Global investment, economic growth, and business confidence have dropped to record lows this year, the World Bank said in a report published on Tuesday.
  • President Donald Trump's trade wars have largely contributed to the global slowdown, the report said.
  • The World Bank also attributed global slowdown to "renewed financial turmoil in emerging and developing economies" and "a more abrupt deceleration of economic growth."
  • Trump is currently fighting trade wars on multiple fronts, including a tit-for-tat tariff battle with China, potential new tariffs on the European car industry, and a threat to impose a 5% tax on all Mexican goods in an attempt to curb migration.
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President Donald Trump's trade wars have caused so much uncertainty that the global economy is moving at its lowest pace in three years, the World Bank said in a new report.

Global economic growth is expected to slow to 2.6% this year, the World Bank said in its semi-annual Global Economic Prospects report. Specifically, advanced economies are expected to grow at 1.7%, and emerging-market and developing economies at 4%.Advertisement

The report, published on Tuesday, is titled "Heightened Tensions, Subdued Investment."

Business confidence across major advanced and developing economies, as of April 2019, is also at its lowest point since April 2016, according to the World Bank's analysis.

"Of particular concern is a slowdown in global trade growth to the lowest level since the financial crisis ten years ago and a tumble in business confidence," the report said.

U.S. President Donald Trump looks on ahead of a dinner with Britain's Prince Charles, Prince of Wales and Camilla, Duchess of Cornwall, at Winfield House, during their state visit in London, Britain June 4, 2019. Chris Jackson/Pool via REUTERS


Trump during his state visit in Britain this week.

The World Bank did not cite one particular reason for the global slowdown, but made note of "turbulence and uncertainty that afflicted a number of countries late last year and this year."It also warned that "a further escalation of trade disputes between the world's largest economies, renewed financial turmoil in emerging and developing economies, or a more abrupt deceleration of economic growth among major economies than is currently envisioned" could jeopardize further economic growth.Advertisement

The Trump administration is currently waging trade wars on multiple fronts: It's currently engaged in a tit-for-tat tariff battle with China, and also announced a 5% tariff on all Mexican goods to stop the influx of migrants last week.

Read more: While Trump is in Britain, Republicans are reportedly plotting to block his Mexico tariffs

Last month the White House delayed by six months a decision to impose steep tariffs on cars entering the US, a decision which would have seen the European Union retaliate with their own tariff list against the US, Bloomberg reported.Advertisement

The World Bank said it expects the pace of economic growth to eventually stabilize, but warned that the world economy could still be vulnerable if those risks persist or worsen.

jerome powell

Chip Somodevilla/Getty

Federal Reserve chairman Jerome Powell on Capitol Hill in February 2018. He pledged to "act as appropriate" to adjust to US-China trade negotiations on Tuesday.

The report comes as the US Federal Reserve hinted it might cut interest rates later this year, with Fed Chairman Jerome Powell vowing to "act as appropriate" to adjust to US-China trade negotiations.Advertisement

Read more: Dow soars 500 points after Powell signals a rate cut is on the table, investors ignore global trade tensions

Global stocks, US futures, and US equities jumped after Powell's statement, with analysts suggesting that it indicated central banks' willingness to help markets to maintain economic growth, Business Insider's Theron Mohamed reported.