Brookings Index signals deteriorating global outlook as economic policymakers convene

WASHINGTON, UNITED STATES: Threats to global growth are rising as the US-driven trade shock crushes confidence and lams financial markets, ahead of key meetings of economic policymakers in Washington this week.

Confidence indicators have slumped sharply while financial market conditions have deteriorated, as per the Brookings-FT Tracking Indexes for the Global Economic Recovery, or Tiger. The deterioration in the global outlook is a marked contrast to the relatively firm start to the year.

Brookings also said it would be ‘premature’ to forecast a worldwide recession but warned that the breakdown of global trade and higher policy uncertainty would markedly suppress growth.

The findings come as economic policymakers and finance ministers from around the world gather in Washington for the first set of IMF/World Bank spring meetings since Donald Trump’s inauguration as US president.

Kristalina Georgieva, the managing director of IMF, warned the fund was preparing to cut growth forecasts, as “financial markets volatility I up” and “trade policy uncertainty is literally off the charts.”

In January, the fund predicted global growth of 3.3 percent  this year and next, with the US set for an expansion of 2.7 percent this year and 2.1 percent in 2026.

Trump’s decision to announce sweeping tariffs on most of America’s trade partners on April 2 set in train sharp declines in financial markets and a swath of downgrades to growth predictions.

The European Central Bank on Thursday trimmed its key interest rates to 2.25 percent as it prepared for the fallout from the trade wars, warning the outlook for growth had deteriorated because of “rising trade tensions.”