Economy
World Bank flags weakest global growth since 2008 amid tariffs
The World Bank lowered its global growth forecast for 2025 by four-tenths of a percentage point to 2.3%, citing that higher tariffs and heightened uncertainty posed a “significant headwind” for nearly all economies. It projected that the global economy was set for its worst run since the 2008 financial crisis.
In its twice-yearly Global Economic Prospects report, the global lender downgraded its forecasts for nearly 70% of all economies – including the United States, across Asia and Europe, as well as six emerging market regions – from the levels it projected six months ago before U.S. President Donald Trump took office.
Trump has upended global trade with a series of on-again, off-again tariff hikes that have increased the effective U.S. tariff rate from below 3% to the mid-teens – its highest level in almost a century – and triggered retaliation by China and other countries.
The World Bank is the latest body to cut its growth forecast due to Trump’s erratic trade policies, although U.S. officials insist the negative consequences will be offset by a surge in investment and still-to-be-approved tax cuts.
The bank stopped short of forecasting a recession, but said global economic growth this year would be the weakest outside of a recession since 2008.
By 2027, global gross domestic product (GDP) growth was expected to average just 2.5%, the slowest pace of any decade since the 1960s.
The report forecasts that global trade will grow by 1.8% in 2025, down from 3.4% in 2024, and roughly a third of its 5.9% level in the 2000s.
The forecast is based on tariffs in effect as of late May, including a 10% U.S. tariff on imports from most countries. It excludes increases that were announced by Trump in April and then postponed until July 9 to allow for negotiations.
The World Bank said global inflation was expected to reach 2.9% in 2025, remaining above pre-COVID-19 levels, given tariff increases and tight labor markets. “Risks to the global outlook remain tilted decidedly to the downside,” it wrote. The lender said its models showed that a further increase of 10 percentage points in average U.S. tariffs, on top of the 10% rate already implemented, and proportional retaliation by other countries, could shave another half of a percentage point off the outlook for 2025.
Such an escalation in trade barriers would result “in global trade seizing up in the second half of this year … accompanied by a widespread collapse in confidence, surging uncertainty and turmoil in financial markets,” the report said.
Nonetheless, it said the risk of a global recession was less than 10%.
‘Fog on a runway’
Top officials from the U.S. and China met in London this week to try to defuse a trade dispute that has widened from tariffs to restrictions over rare earth minerals, threatening a global supply chain shock and slower growth.
“Uncertainty remains a powerful drag, like fog on a runway. It slows investment and clouds the outlook,” World Bank Deputy Chief Economist Ayhan Kose told Reuters in an interview.
But Kose said there were signs of increased dialogue on trade that could help dispel uncertainty, and supply chains were adapting to a new global trade map, not collapsing. Global trade growth could modestly rebound in 2026 to 2.4%, and developments in artificial intelligence could also boost growth, he said.
“We think that eventually the uncertainty will decline,” Kose said. “Once the type of fog we have lifts, the trade engine may start running again, but at a slower pace.”
Kose said that while things could get worse, trade continued and China, India and others were still delivering robust growth. He said many countries were also discussing new trade partnerships that could pay dividends later.
White House pushes back
The World Bank said the global outlook had “deteriorated substantially” since January, mainly due to advanced economies, which are now seen growing by just 1.2%, down half a percentage point, after expanding by 1.7% in 2024.
The U.S. forecast was slashed by nine-tenths of a percentage point from its January forecast to 1.4%, and the 2026 outlook was lowered by four-tenths of a percentage point to 1.6%. Rising trade barriers, “record-high uncertainty” and a spike in financial market volatility were expected to weigh on private consumption, trade and investment, it said.
The White House pushed back against the forecast, citing recent economic data that pointed to a stronger economy.
“The World Bank’s prognostications are untethered to the data: investment in real business equipment surged by nearly 25% in Q1 of 2025; real disposable personal income grew by a robust 0.7% month-over-month in April; and Americans have now seen three consecutive expectation-beating jobs and inflation reports,” White House spokesperson Kush Desai said.
He added that a sweeping budget package currently making its way through Congress would provide tax relief and “further turbo-charge America’s economic resurgence under President Trump.”
The World Bank cut growth estimates in the eurozone by three-tenths of a percentage point to 0.7% and in Japan by half a percentage point to 0.7%. It said emerging markets and developing economies were expected to grow by 3.8% in 2025 versus 4.1% in the forecast in January.
Poor countries would suffer the most, the report said. By 2027, developing economies’ per capita GDP would be 6% below pre-pandemic levels, and it could take these countries, minus China, two decades to recoup the economic losses of the 2020s.
Mexico, heavily dependent on trade with the U.S., saw its growth forecast cut by 1.3 percentage points to 0.2% in 2025. The World Bank left its forecast for China unchanged at 4.5% from January, saying Beijing still had monetary and fiscal space to support its economy and stimulate growth.
Turkish automaker Tofaş on Monday launched production of a new line of light commercial vehicles in the northwestern automotive hub of Bursa.
The $300 million K9 project is a joint investment by Koç Holding, Türkiye’s largest conglomerate, and Stellantis, the global automaker that owns the Fiat, Peugeot, Citroen and Opel brands.
Industry and Technology Minister Mehmet Fatih Kacır said the K9 project will add 100,000 vehicles of annual production capacity at Tofaş, a long-running venture between Koç and Stellantis, and create 1,000 jobs.
It will also create new business for nearly 100 domestic suppliers, Kacır told the launch ceremony in Bursa.
The line is built on a multi-energy platform, which gives Tofaş production flexibility and could pave the way for electric light commercial vehicles to be built in Bursa, he said.
Production covers models for Citroen, Fiat, Opel and Peugeot under a strategic agreement Stellantis and Tofaş signed in September 2025.
About 20% of K9 output will be exported, Tofaş CEO Cengiz Eroldu said. The plant recently raised its capacity to 500,000 vehicles a year.
Samir Cherfan, Stellantis’ Middle East and Africa operations director, said the project covers five models: the Fiat Doblo, Citroen Berlingo, Opel Combo, and Peugeot Rifter and Partner.
He said the platform is also ready for electric light commercial vehicles.
Eroldu noted that the Fiat Doblo and Opel Combo, produced at the plant from 2000 to 2023, are returning to Bursa under the project. Cherfan said more than 600,000 customers bought the Doblo in that period.
$1B investment in 5 years
Ömer Koç, chair of Koç Holding, said the K9 follows the K0 model, which began production last year.
He said Koç and Stellantis had invested $1 billion in Tofaş over the past five years, half of it in research and development. K9 production is eventually targeted at 150,000 vehicles a year, he said.
Koç said the model will strengthen Türkiye’s leadership in commercial vehicle production in Europe. Tofaş aims to use its capacity fully, offer customers more domestically made models and contribute to the current account balance, he said.
Talks with Stellantis on other new models are continuing, he added.
Tofaş has produced 7.5 million vehicles over half a century, according to Koç. Stellantis handed management of all its Turkish operations to Tofaş as of 2025, a move Koç called a strong sign of both partners’ confidence.
Türkiye’s place in European supply chains
Kacır said Türkiye’s annual goods exports have risen to $283 billion from $36 billion in 2002, and that the automotive industry exported $41.5 billion last year, a record.
He said about 60% of foreign direct investment into Türkiye since 2002 has come from the European Union. Türkiye produced 1.5 million motor vehicles last year, nearly 80% of them at plants run by leading EU automakers, directly or in local partnerships, he said.
He added that 64% of the auto parts industry’s exports go to EU countries, and 56% of auto parts imports come from the bloc.
“The way for Europe to build economies of scale is to increase cooperation with Türkiye, a fast-growing country of 86 million people,” Kacır said. He said Europe’s economy has grown 1.4% a year since 2002, against 5.3% for Türkiye, and that annual car sales in Türkiye have risen from about 300,000 in the early 2000s to 1.5 million.
Britain’s new government unveils its first budget Wednesday, testing a commitment of Prime Minister Andy Burnham to ease the cost of living and ramp up defense spending with little financial room for maneuver.
It could prove to be a tall order for Treasury chief John Healey as rising inflation and borrowing costs – largely a consequence of the U.S.-Iran war – increase the government’s debt pile and heap pressure on businesses and individuals.
“This is a budget that is about breathing space for people, for businesses too, and that helps bring a bit of hope,” Burnham, who replaced Keir Starmer as prime minister in July with their Labour party down in the polls, said Monday.
Speaking to the Good Morning Britain television program, he added that the latest annual tax and spending plans will set out “the path to meet our NATO commitments” under a “funded” defense plan.
Labour had ruled out rises to income and capital gains tax, raising the prospect of spending cuts to balance the books, according to analysts.
The budget is expected to focus on smaller, more immediate measures to help ease pressure on household bills, they added.
“Priority has to be credibility first, which means a budget that clearly meets the fiscal rules, is fully costed and avoids large unfunded giveaways,” James Wood, professor of political economy at the University of Cambridge, told Agence France-Presse (AFP).
“With government debt at around 94% of GDP, the room to maneuver is limited,” he added.
Healey, whose official title is chancellor of the exchequer, has pledged to abide by the rules laid out by his predecessor Rachel Reeves, which state that day-to-day spending must balance with government tax receipts.
The International Monetary Fund (IMF) recently forecast that Britain’s economy would grow faster than expected this year, before slowing slightly in 2027.
Banks to be hit?
Healey is expected to use a windfall tax on banks to fund a package of spending measures to help households manage rising energy bills.
Oil and gas companies operating in the U.K. already face a windfall tax on their bumper profits.
Burnham, who will on Tuesday have served 100 days as prime minister, has already offered the British public some relatively low-cost relief such as a tax cut on electricity bills.
Further measures could entail an extension to a freeze on fuel duty and more targeted help for the poorest households, according to reports.
Surging diesel costs at the pump helped push Britain’s annual inflation rate to 3.5% in September, the highest rate for nearly a year. Average U.K. diesel prices went on to hit record highs earlier this month.
The government last week approved drilling in a North Sea gas field, claiming the move was aimed at boosting energy security rather than cutting bills.
The budget will also include measures to reduce “pointless paperwork” to lower costs for businesses, according to Healey.
A package of investment in artificial intelligence safety was announced by the Treasury over the weekend, amid growing global concerns over the cyber risks posed by AI.
“The short-run focus is likely to be on reassuring markets and supporting businesses… with more generous measures held back,” said Wood.
Surging borrowing costs
The government’s fiscal headroom of 23.6 billion pounds ($31.5 billion) is expected to be slashed in an update given alongside the budget, as higher borrowing costs hike the state’s debt repayments.
The Office for Budget Responsibility, an independent financial watchdog, will on Wednesday also publish its latest U.K. growth and inflation forecasts.
Government bond yields around the world have struck multi-decade highs in recent weeks as wider inflation climbs largely because of energy prices soaring on wars in the Middle East and Ukraine.
Rising inflation has cemented expectations that the Bank of England (BoE) will hike its benchmark interest rate next month, further pressuring Britons holding loans, including mortgages.
The Audi chief drew heavy criticism Monday for appearing alongside U.S. President Donald Trump at a campaign rally in the battleground state of Georgia, with the head of Germany’s top union saying it violated the automaker’s company guidelines.
Gernot Doellner appeared alongside Trump at the rally in Perry, near Macon in central Georgia, to announce plans to build a $4 billion plant, the luxury carmaker’s first in the U.S., which would produce 200,000 SUVs annually.
Top VW committee must decide on US plant
The announcement of the plan, which needs approval by the supervisory board of parent Volkswagen, including German labor representatives, follows lengthy considerations over launching U.S. production to escape import tariffs that cost Audi around 1.2 billion euros ($1.34 billion) last year.
“Doellner is also in flagrant breach of his own company’s rules, which expressly require political neutrality in the run-up to elections,” said Christiane Benner, head of Germany’s IG Metall union and deputy chair of the Volkswagen supervisory board.
Audi had no immediate comment on the matter.
However, a person familiar with the matter said Audi’s management board had cleared an exception to the company’s code of conduct before Doellner’s appearance. Under the code, the board can allow deviations from the rules except in cases involving criminal offences, the source said.
The automaker’s top stakeholders discussed the matter during a meeting also attended by Benner and fellow labor representative Daniela Cavallo, with the latter expressing reservations about the appearance without formally opposing it, the person said.
A second person confirmed that Volkswagen’s supervisory board committee, which is already fraught with tension over the company’s sweeping restructuring, had discussed the issue on Friday.
Trump has voiced his support in the past for the far-right Alternative for Germany (AfD) party, raising concerns among Germany’s political and corporate mainstream.
German automotive expert Ferdinand Dudenhoeffer referred to Doellner as a “mini Elon Musk,” comparing him to the Tesla boss who has appeared onstage with Trump.
Audi’s code of conduct forbids “public engagements with political parties or politicians standing for election, nor any sponsorship of such events” in the three months leading up to an election.
Trump keen to promote impact of tariffs
Trump is in the midst of a nationwide campaign blitz to bolster his Republicans, who are trailing the Democrats in opinion polls ahead of the Nov. 3 midterm elections. One of his campaign messages is that his tariffs are creating more U.S. manufacturing jobs.
Olaf Lies, state premier of the German state of Lower Saxony, Volkswagen’s second-largest shareholder, said it was inappropriate that Doellner had become part of a political spectacle.
“A campaign rally cannot be the right place to announce an investment of this magnitude,” he said. “This appearance has caused consternation among employees who are worried about their jobs here, and far beyond. I can fully understand that – I feel the same way.”
The U.S. investment plan coincides with Volkswagen’s push to cut 100,000 jobs and cut excess production as it grapples with heavy losses in China while absorbing steep tariffs and the costly transition to electric vehicles.
The group’s German production sites have been under particular pressure to reduce costs, with Audi’s factory in Neckarsulm one of four plants threatened with closure from early next decade.
“The optics are not great, jobs are being created in the U.S. while Audi is reducing the capacity globally,” Metzler analysts said of the U.S. plan. “Still, we would argue the decision to produce in the U.S. is right.”
Artificial intelligence giant Anthropic filed papers Monday for what could be the biggest initial public offering of stock ever, even as its top executive warns that advanced AI could pose an existential threat to humanity.
The filing sets up the San Francisco company for a Wall Street debut next month, potentially eclipsing the SpaceX initial public offering in June that raised a record $86 billion.
An Anthropic IPO would also put the company ahead of OpenAI in going public in what is expected to be a pair of blockbuster stock debuts for the rival AI labs.
The filing comes weeks after CEO Dario Amodei argued in an essay for slowing the development of the most advanced AI models.
An IPO could provide Anthropic with enormous resources to accelerate its expansion. The amount the company ultimately raises remains uncertain, as do its final valuation and offering price, but even at lower estimates, it would turn the five-year-old startup into one of the world’s most valuable companies and potentially boost the wealth of Amodei and his sister and co-founder, Daniela, by billions of dollars.
The 335-page document showed Anthropic’s revenue is growing rapidly, but like many other tech companies going public, it has yet to turn a profit. The company behind the chatbot Claude reported a net loss of $80.7 billion in the first half of 2026. That compares to a loss of $13 billion in the same period a year earlier.
Despite the losses, Anthropic, valued earlier this year at $965 billion by private investors, is reportedly set to see that value rise to $1.5 trillion or possibly $2 trillion, although its final valuation has not been established. At $1.5 trillion, Anthropic would rank among the world’s most valuable public companies, alongside Tesla.
As for money raised, the offering could raise as much as $100 billion, according to reports, surpassing the current record set by another one of Musk’s companies, SpaceX, earlier this year.
In a regulatory filing, Anthropic said it will list its stock on the Nasdaq Global Select Market under the ticker symbol “ANT.”
In the filing, the company said it could use some of that money on acquiring other businesses and technology as well as investing in infrastructure to grow its business to take on rivals.
Formed in 2021 by ex-OpenAI leaders, Anthropic is locked in a fight for dominance with that company, and the two leaders, Amodei and OpenAI CEO Sam Altman, are widely seen as bitter rivals.
But they have plenty of other competitors, including Google, newer startups in the U.S. and China and Musk’s SpaceX, which has an AI business.
Anthropic, OpenAI and SpaceX’s AI division have all been losing more money than they make because of the huge costs in resources in building AI, fueling concerns of a bubble.
The IPO would help cover any cash shortfall as well as shower extraordinary wealth on Anthropic’s seven founders, including Amodei and his sister. Collectively, they own nearly 500 million shares, though it’s unclear from the offering document how much that will represent of the company after the IPO.
The filing also listed a host of risks for the San Francisco-based Anthropic, ranging from not being able to retain key staff, navigate regulatory roadblocks and secure enough compute power to run its AI systems.
But the standout was that its AI models could “pose catastrophic or existential risks to humanity.”
The IPO comes as worries about AI grow inside and outside the industry and reports continue to emerge about increasingly powerful systems that solve problems beyond human capacity but could also go rogue and carry out other, more harmful tasks.
In September, Amodei said the AI industry should slow its fast-moving development to give safety measures time to catch up. Without such a slowdown, Amodei warned AI could be capable of letting loose a swarm of agents that could take over the entire internet within six to 12 months.
He offered a plan in a post on his website to increase checks on the industry, noting that Anthropic is already undertaking part of this on its own. As for other steps, though, he said that would require coordination across the industry and with governments around the world, including authoritarian ones.
“I believe that if slowing down bought us even an extra year or two before models reach critical levels of capability, and we used that time to advance alignment, we could greatly reduce the risk that something goes seriously wrong,” Amodei wrote.
The European Central Bank (ECB) meets on Thursday against a backdrop of upheaval in France and an Iran war that is keeping energy prices above $100, meaning inflation risks remain elevated.
“How do you set rates against that backdrop? It’s incredibly difficult,” David Coombs, head of multiasset investments at Rathbones Asset Management, said.
Here’s a look at five key questions for markets ahead of the October meeting.
What will ECB do?
Leave its key interest rate unchanged at 2.5%.
A pause is widely anticipated after the ECB raised rates in June and September to counter rising inflation, as the Iran war pushed up energy prices.
Economists polled by Reuters expect a quarter-point rate hike in December.
“I don’t think they’ve become materially less worried about inflation here,” MUFG senior economist Henry Cook said.
What will ECB say about rate outlook?
It’s likely to stick with a data-dependent approach.
Caught between high inflation, at 3.8% in September, and concerns that rising government bond yields could hurt growth, policymakers have recently argued for what ECB President Christine Lagarde called a “measured response.”
“There will be a definite flag to the tightening in financial conditions and how it should slow growth and hence curb inflationary pressures,” said Barclays’ head of euro rates strategy Rohan Khanna.
“But also, plenty of uncertainty around the conflict and the outlook for energy prices.”
How worried is ECB about energy-driven inflation rise?
Comments from officials such as ECB chief economist Philip Lane suggest the ECB is not overly worried, for now, about high energy costs leading to other prices and wages rising.
A muted increase in core inflation, which excludes food and fuel prices, to 2.5% last month from 2.4%, suggests that high energy costs have yet to generate the sort of second-round impacts that could set off a hard-to-break inflation spiral.
Still, with oil up 90% this year and headline inflation above its 2% target, the ECB will likely stress vigilance.
Eurozone consumers nudged up their inflation expectations for the next 12 months in September, a survey on Friday showed.
“If the war in Iran escalates, or if we see further pressure on energy prices, the risk is still more rate hikes in 2027,” said Bas van Geffen, senior macro strategist at Rabobank, adding he did not have any penciled in for next year.
Markets price in at least two hikes by mid-2027.
What about French bond sell-off?
Well, the ECB is watching.
French 10-year borrowing costs just hit 24-year highs above 5% and a weakened government is grappling with violent protests that could undermine efforts to improve fragile finances.
Also, the premium investors demand to hold 10-year French bonds over safer Germany is at 167 bps, up from 92 bps when the ECB met last month.
But don’t expect the ECB to act soon with measures such as the Transmission Protection Instrument that allows it to buy bonds from any member state experiencing an “unwarranted, disorderly” tightening of its financing conditions.
France should solve its own debt problems through fiscal consolidation, says Lagarde.
The ECB could hold back on rate hikes if it thinks a crisis in France could hurt economic growth materially, Berenberg chief economist Holger Schmieding said.
“If there are serious contagion effects from a hypothetical French crisis to other countries where the fiscal policy is much more sustainable, the ECB would probably use its TPI to shield these other countries, not France,” he said.
Who will replace Lagarde?
The ECB chief, who could be appointed as the next World Economic Forum (WEF) chair as early as November, will likely be pressed on succession.
The former central bank governors of the Netherlands and Spain, Klaas Knot and Pablo Hernandez de Cos, are seen as frontrunners.
Lagarde’s exit would open a second vacancy on the ECB’s six-member Executive Board after Isabel Schnabel’s recent resignation. Chief economist Lane will step down in May.
Lagarde’s term is scheduled to end next October. Leaving early allows time for a new ECB chief to be picked before France’s spring presidential election. A snap Spanish election could also impact the politics around ECB succession, analysts said.
Türkiye will unveil its “National Energy 2040” vision at a launch in Istanbul next week, Energy and Natural Resources Minister Alparslan Bayraktar said Monday.
The plan envisions about $100 billion of investment in electricity transmission and distribution networks, Bayraktar told an event in Ankara.
“We are entering a new era in which the use of electricity will increase in every area of our economy, from industry to transportation, from buildings to agriculture,” he said. Bayraktar noted that the work on the new energy architecture was nearing completion.
The world faces the largest energy crisis of modern times, said the minister, stressing that supplying energy without interruption, reliably and at an affordable cost is a matter of security as well as economy.
He said Türkiye has brought its own oil and natural gas into the economy, expanded renewable capacity, is adding nuclear energy to the system and is using energy more efficiently.
Grids at center
Bayraktar said energy independence cannot be achieved only by owning resources or boosting generation capacity.
“We also need to use the energy we produce at the right time, in the right place and in the most efficient way,” he said. That requires a strong electricity infrastructure, smart grids, technology and skilled people, he said, and full independence means transforming the whole system, from generation to transmission, distribution and consumption.
He said electric vehicles, electrified production, artificial intelligence applications and the growth of data centers will raise electricity demand and change its nature. He said energy transition cannot be judged by power plant investments alone.
Transmission and distribution networks, storage, digital technologies and system management must be developed together, he said, and the National Energy 2040 plan, to be unveiled next Thursday, foresees about $100 billion of investment in transmission and distribution.
New industrial zones, growing cities, electric vehicles, rooftop solar systems and the digital economy will create new needs that adding lines and transformers cannot meet, Bayraktar said.
Grids must be able to monitor conditions in real time, forecast demand accurately, respond faster to faults and use existing capacity more efficiently, he said. “The new era in electricity distribution will be one of not only stronger grids but also smarter, more flexible and more resilient ones,” he said.
Domestic software, cybersecurity
Bayraktar said developing domestic software and spreading it across the sector is an important part of the transition.
He said research and development budgets the Energy Market Regulatory Authority (EPDK), Türkiye’s electricity and natural gas regulator, provides to distribution companies contribute greatly to developing local solutions.
Under the 2040 plan, he said, the government wants to see domestic software widely used across distribution infrastructure and protected against cyberattacks.
Global electrification pledge
Bayraktar said Türkiye sees this year’s United Nations climate summit COP31 as an opportunity to turn climate goals into concrete investments, projects and international cooperation.
He said one of the main initiatives Türkiye will lead there is the Global Electrification Pledge, which aims to raise electricity’s share of global final energy consumption to 35% by 2035.
Strengthening electricity grids will be one of Türkiye’s main energy agenda items at the summit, he said. Türkiye aims to deepen international cooperation on modernizing and digitizing distribution networks, integrating renewable energy and financing grid investment.
Bayraktar said its distribution companies have begun operating abroad, and Türkiye wants to make their experience and technology more visible internationally.
-
Politics2 days agoTürkiye rules out fight against Houthis under Saudi defense pact: Güler
-
Economy1 day agoEarnings reports, Fed decision to dominate busy week for markets
-
Economy3 days agoTürkiye’s Togg unveils amber-themed special edition of its fastback
-
Politics3 days agoTürkiye convenes 8 nations for first-ever R4+E3 meeting in Istanbul
-
Sports2 days agoMadrid’s Mourinho rejects Barcelona comparisons ahead of Clasico
-
Politics3 days ago‘Anatomy of Israeli Expansionism’ exposes Tel Aviv’s hawkish agenda
-
Politics6 hours agoFrance reportedly mulls postponing Med grid after Türkiye-Libya deal
-
Politics2 days ago8-nation Istanbul talks urge diplomacy to quell Mideast conflicts