By : Ahmad M. Awad
Jordan Daily – Economic forecasts increasingly indicate that the world is approaching a new recession, driven by slowing growth and rising inflation, particularly in the United States. Recent economic indicators show that global financial markets are experiencing growing turbulence, with declining investor and consumer confidence, increasing the likelihood of a sharp economic slowdown in both the U.S. and worldwide.
U.S. economic policies continue to cast a shadow over the global economy. The trade barriers imposed by the U.S. administration have led to rising costs for imported goods, fueling inflation and slowing industrial investment. According to data from the U.S. Department of Labor, the labor market has recorded its worst performance since 2020, with declining employment rates, reflecting the uncertainty looming over the economy.
The U.S. stock market has lost more than $4 trillion due to recent volatility, while the University of Michigan’s Consumer Sentiment Index has dropped by 15% over the past two months. These declines highlight growing concerns over rising prices and their impact on household purchasing power, reinforcing the possibility of stagflation.
International financial institutions continue to lower their growth projections for both the U.S. and the global economy. The Organization for Economic Cooperation and Development (OECD) has downgraded its forecasts, warning that increasing trade restrictions are hampering trade and investment flows.
The International Monetary Fund (IMF) has also issued a report warning that global economic growth may be limited to just 3.2% in 2024 and 2025, significantly lower than the average growth rate of the past decade. The IMF emphasized that current economic policies could lead to a sharp slowdown in both advanced and emerging economies.
The United Nations has projected that global economic growth will reach only 2.8% in 2025, significantly lower than pre-pandemic levels, reflecting the slow pace of global economic recovery.
The impact of these policies is not confined to the U.S. but extends to Europe and China as well. In the European Union, the German economy has shrunk by 0.4% in GDP over the past two months, indicating a slowdown in industrial demand and declining exports.
China is also facing immense pressure due to U.S. trade restrictions, with Chinese stock prices falling amid weakened investor confidence. Estimates suggest that China could lose up to $300 billion annually in export revenues if trade tensions persist, which may prompt retaliatory measures that could further destabilize global markets.
The greatest threat facing the global economy today is stagflation, where slowing economic growth coincides with rising inflation. According to the IMF, U.S. inflation could reach 6% by the end of 2025, which may force the Federal Reserve to raise interest rates again, further exacerbating the economic slowdown and increasing unemployment rates.
These developments indicate that the global economy is facing mounting challenges, with escalating risks related to protectionist trade policies, rising debt levels, and declining investments. If these factors persist, they could push the world into a new economic crisis, potentially more severe than the 2008 financial meltdown, requiring more balanced economic policies to mitigate its impact on global stability.