Growth in China, the world's second largest economy, and in Europe is expected to be hit by the announcement of new tariffs by the Donald Trump administration, while the impact on growth in the US will be limited, according to Goldman Sachs.
This month, the US announced a 10 per cent duty on all goods imported from China into the US.
It also ordered a 25 per cent import tax on all steel and aluminium entering the US, set to take effect on March 12, while delaying tariffs on Mexico and Canada by a month.
"We would expect that growth in the US would probably slow by a quarter point or so," Joseph Briggs, who co-leads the global economics team at Goldman Sachs Research, said on Friday. "And furthermore, some of the more pro-growth parts of President Trump's agenda should provide offsets that leave the net impact on GDP (gross domestic product) somewhat neutral."
Wall Street indices were mixed at the end of the session on Friday, with the S&P 500 near flat and Nasdaq Composite up by 0.4 per cent as traders tracked tariff announcements and the US economic data, which showed inflation ticking up in the world’s largest economy.
The Dow Jones Industrial Average closed down by 0.4 per cent.
On Thursday, Mr Trump also directed commerce and economic officials to study reciprocal tariffs on nations that impose duties on American goods, with their recommendations due by April 1.
He also threatened a 100 per cent tariff on Brics countries if they decide to replace the US dollar as their reserve currency.
“We do expect bigger headwinds in China. They have been the target of most of the hawkish trade news recently. We have seen 10 percentage point tariffs already implemented … we are expecting another 10 percentage points, and under that scenario, we expect that growth this year will probably be about 70 basis points lower than it would have been otherwise,” Mr Briggs said.
China's economy is forecast to grow by 4.6 per cent in 2025, according to a recent analysis by the International Monetary Fund. The country’s economy recovered slowly following the coronavirus pandemic, with the government unveiling a series of stimulus packages in support.
Europe is also expected to be hit by US trade policies and is projected to record slower growth this year.
“If you are a German exporter and you're seeing growth slow in China and you're worried about tariffs on the EU, then you're probably not going to be scaling up hiring or undertaking large capital investments until you have clarity around the business environment that you're going to be operating in,” Mr Briggs said.
“So, during the last trade war, we saw that this type of dynamic slowed growth in the euro area probably by about a point. We expect that a similar dynamic is going to play out this time. It's the reason why, the day after Trump's election, we took down our European growth forecast by half a point, and are still forecasting a well-below-consensus pace of growth of 0.7 per cent in the euro area this year.”
In Europe, London's FTSE 100 closed 0.4 per cent lower, while Paris' CAC 40 gained 0.2 per cent. Frankfurt's DAX was down 0.4 per cent when markets closed on Friday on concerns related to economic slowdown in Europe.
The IMF forecasts the euro area to grow by 1 per cent this year in its world economic outlook in January.
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
The most expensive investment mistake you will ever make
When is the best time to start saving in a pension? The answer is simple – at the earliest possible moment. The first pound, euro, dollar or dirham you invest is the most valuable, as it has so much longer to grow in value. If you start in your twenties, it could be invested for 40 years or more, which means you have decades for compound interest to work its magic.
“You get growth upon growth upon growth, followed by more growth. The earlier you start the process, the more it will all roll up,” says Chris Davies, chartered financial planner at The Fry Group in Dubai.
This table shows how much you would have in your pension at age 65, depending on when you start and how much you pay in (it assumes your investments grow 7 per cent a year after charges and you have no other savings).
|
Age
|
$250 a month
|
$500 a month
|
$1,000 a month
|
|
25
|
$640,829
|
$1,281,657
|
$2,563,315
|
|
35
|
$303,219
|
$606,439
|
$1,212,877
|
|
45
|
$131,596
|
$263,191
|
$526,382
|
|
55
|
$44,351
|
$88,702
|
$177,403
|
Tamkeen's offering
- Option 1: 70% in year 1, 50% in year 2, 30% in year 3
- Option 2: 50% across three years
- Option 3: 30% across five years
Will the pound fall to parity with the dollar?
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
Bloomberg
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Info
What: 11th edition of the Mubadala World Tennis Championship
When: December 27-29, 2018
Confirmed: men: Novak Djokovic, Rafael Nadal, Kevin Anderson, Dominic Thiem, Hyeon Chung, Karen Khachanov; women: Venus Williams
Tickets: www.ticketmaster.ae, Virgin megastores or call 800 86 823
White hydrogen: Naturally occurring hydrogen
Chromite: Hard, metallic mineral containing iron oxide and chromium oxide
Ultramafic rocks: Dark-coloured rocks rich in magnesium or iron with very low silica content
Ophiolite: A section of the earth’s crust, which is oceanic in nature that has since been uplifted and exposed on land
Olivine: A commonly occurring magnesium iron silicate mineral that derives its name for its olive-green yellow-green colour
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3EName%3A%3C%2Fstrong%3E%20SupplyVan%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%2C%20UAE%3Cbr%3E%3Cstrong%3ELaunch%20year%3A%3C%2Fstrong%3E%202017%3Cbr%3E%3Cstrong%3ENumber%20of%20employees%3A%3C%2Fstrong%3E%2029%3Cbr%3E%3Cstrong%3ESector%3A%3C%2Fstrong%3E%20MRO%20and%20e-commerce%3Cbr%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20Seed%3C%2Fp%3E%0A
Killing of Qassem Suleimani
UAE currency: the story behind the money in your pockets
Getting%20there%20and%20where%20to%20stay
%3Cp%3EFly%20with%20Etihad%20Airways%20from%20Abu%20Dhabi%20to%20New%20York%E2%80%99s%20JFK.%20There's%2011%20flights%20a%20week%20and%20economy%20fares%20start%20at%20around%20Dh5%2C000.%3Cbr%3EStay%20at%20The%20Mark%20Hotel%20on%20the%20city%E2%80%99s%20Upper%20East%20Side.%20Overnight%20stays%20start%20from%20%241395%20per%20night.%3Cbr%3EVisit%20NYC%20Go%2C%20the%20official%20destination%20resource%20for%20New%20York%20City%20for%20all%20the%20latest%20events%2C%20activites%20and%20openings.%3Cbr%3E%3C%2Fp%3E%0A
