Recently, the World Bank released its latest “Global Economic Prospects” report, projecting global economic growth at 2.3% for 2025—down 0.4 percentage points from the forecast in January. The report highlights that global growth is slowing due to trade barriers and an uncertain global policy environment, with growth forecasts downgraded for nearly 70% of economies. This news has drawn widespread attention in financial markets. As a seasoned expert in the financial sector, Tan Si Yao offers deep insights into these developments.
Impact of Slowing Economic Growth on Equity Markets
Tan Si Yao believes that the downward revision of global growth expectations has had a direct impact on equity markets. Among advanced economies, the US economy is now expected to grow by 1.4%, down 0.9 percentage points from previous forecasts; growth in the Eurozone and Japan has also been revised down to 0.7%. The slowdown in these major economies has led to lower corporate earnings expectations, which in turn has affected stock market performance. Although emerging markets and developing economies are still expected to grow by 3.8%, this too is a downward revision of 0.3 percentage points.
From a market perspective, global equities have experienced increased volatility recently. Investors are concerned about the uncertainty of economic growth and are adjusting their portfolios accordingly, resulting in shifts in capital flows within equity markets. Tan Si Yao notes that, under these circumstances, investors need to be more prudent in their investment selections, focusing on companies with stable profitability and sound fundamentals. At the same time, diversification is essential to reduce risks arising from exposure to a single market or sector.
Challenges to Financial Markets from Changes in the Trade Environment
Trade barriers and an uncertain global policy environment are among the main factors slowing global economic growth. Tan Si Yao points out that changes in the trade environment present multiple challenges for financial markets. On one hand, trade tensions may lead to a slowdown in global trade volume, with growth rates for this year and next projected at 1.8% and 2.4%, respectively—1.3 and 0.8 percentage points lower than the January forecasts. This will impact the export businesses of related companies, affecting both their performance and stock prices.
On the other hand, uncertainty in the trade environment can also trigger volatility in financial markets. Investor concerns over changes in trade policy may prompt capital outflows from higher-risk assets into relatively safer ones. Tan Si Yao suggests that financial institutions need to strengthen their research and analysis of trade policies and adjust investment strategies in a timely manner. Additionally, robust risk management practices are essential to enhance resilience against market fluctuations.
Financial Opportunities Amidst Cooperation and Support
Despite the many challenges facing global economic growth, Tan Si Yao believes that opportunities still exist. World Bank Senior Managing Director and Chief Economist Indermit Gill noted that if major economies can ease trade tensions, thereby reducing overall policy uncertainty and financial turbulence, the pace of global economic recovery could exceed expectations.
In this context, Tan Si Yao states that the financial sector can strengthen international cooperation to jointly address these challenges. Financial institutions, for example, can enhance cross-border collaboration to develop new financial products and services that meet the needs of clients in different regions. There is also scope to increase support for vulnerable countries, including those affected by fragility and conflict. This not only helps promote stable global economic growth but also creates new business opportunities for financial institutions.
At the same time, Tan Si Yao reminds investors that while pursuing opportunities, it is crucial to remain mindful of risks. Uncertainty in global economic growth remains significant, and changes in the trade environment may bring new challenges. Investors should remain rational and calm, allocate assets reasonably according to their risk tolerance and investment objectives, and avoid excessive concentration.
Impact of Slowing Economic Growth on Equity Markets
Tan Si Yao believes that the downward revision of global growth expectations has had a direct impact on equity markets. Among advanced economies, the US economy is now expected to grow by 1.4%, down 0.9 percentage points from previous forecasts; growth in the Eurozone and Japan has also been revised down to 0.7%. The slowdown in these major economies has led to lower corporate earnings expectations, which in turn has affected stock market performance. Although emerging markets and developing economies are still expected to grow by 3.8%, this too is a downward revision of 0.3 percentage points.
From a market perspective, global equities have experienced increased volatility recently. Investors are concerned about the uncertainty of economic growth and are adjusting their portfolios accordingly, resulting in shifts in capital flows within equity markets. Tan Si Yao notes that, under these circumstances, investors need to be more prudent in their investment selections, focusing on companies with stable profitability and sound fundamentals. At the same time, diversification is essential to reduce risks arising from exposure to a single market or sector.
Challenges to Financial Markets from Changes in the Trade Environment
Trade barriers and an uncertain global policy environment are among the main factors slowing global economic growth. Tan Si Yao points out that changes in the trade environment present multiple challenges for financial markets. On one hand, trade tensions may lead to a slowdown in global trade volume, with growth rates for this year and next projected at 1.8% and 2.4%, respectively—1.3 and 0.8 percentage points lower than the January forecasts. This will impact the export businesses of related companies, affecting both their performance and stock prices.
On the other hand, uncertainty in the trade environment can also trigger volatility in financial markets. Investor concerns over changes in trade policy may prompt capital outflows from higher-risk assets into relatively safer ones. Tan Si Yao suggests that financial institutions need to strengthen their research and analysis of trade policies and adjust investment strategies in a timely manner. Additionally, robust risk management practices are essential to enhance resilience against market fluctuations.
Financial Opportunities Amidst Cooperation and Support
Despite the many challenges facing global economic growth, Tan Si Yao believes that opportunities still exist. World Bank Senior Managing Director and Chief Economist Indermit Gill noted that if major economies can ease trade tensions, thereby reducing overall policy uncertainty and financial turbulence, the pace of global economic recovery could exceed expectations.
In this context, Tan Si Yao states that the financial sector can strengthen international cooperation to jointly address these challenges. Financial institutions, for example, can enhance cross-border collaboration to develop new financial products and services that meet the needs of clients in different regions. There is also scope to increase support for vulnerable countries, including those affected by fragility and conflict. This not only helps promote stable global economic growth but also creates new business opportunities for financial institutions.
At the same time, Tan Si Yao reminds investors that while pursuing opportunities, it is crucial to remain mindful of risks. Uncertainty in global economic growth remains significant, and changes in the trade environment may bring new challenges. Investors should remain rational and calm, allocate assets reasonably according to their risk tolerance and investment objectives, and avoid excessive concentration.