Business
The IMF significantly revised down its forecasts of global growth, mostly because the “swift escalation of trade tensions and extremely high levels of policy uncertainty” are expected to impact economic activity. The fund now expects the world economy to expand by 2.8% this year, down from its previous projection of 3.3%. Prospects for almost all the major economies were downgraded. America’s GDP is now forecast to rise by 1.8% this year and output in the euro area is expected to increase by 0.8%, with Germany not growing at all. The IMF admitted that, given the fluid policy situation, its estimates could change.
The chaotic world of Trump
Stockmarkets had another rollercoaster week. Investors took fright when Donald Trump made several comments deriding Jerome Powell for not cutting interest rates at a faster pace. Rumours swirled that the president was studying ways to fire the Federal Reserve’s chairman. But after markets swooned at the idea of the White House interfering with the central bank, Mr Trump toned down the rhetoric and said he had “no intention” of sacking Mr Powell.
The dollar dropped to a three-year low against a basket of currencies amid Mr Trump’s tirade. The price of gold, a haven for investors in times of stress, rose above $3,500 a troy ounce for the first time.
Mr Trump soothed markets further by saying he plans to be “very nice” to China in trade talks, suggesting that he could substantially reduce tariffs of 145% he has imposed on most Chinese goods. Scott Bessent, Mr Trump’s treasury secretary, has said the trade stand-off with China is unsustainable, but also that tariff reductions would not be unilateral.
Meanwhile, America imposed duties of up to 3,521% on imports of solar panels from Cambodia and lower levies on those from Malaysia, Thailand and Vietnam. The tariffs come after an investigation, which started during the Biden administration, concluded that solar manufacturers in those countries are benefiting from state subsidies.
In one telling indication of how Mr Trump’s policies have upended established trade, DHL, a global logistics company, suspended business-to-consumer shipments to the United States worth over $800. The company blamed more stringent customs checks in America. Business-to-business deliveries are not affected.
Tesla reported a 9% drop in revenues and a 71% fall in net profit for the first quarter, year on year. Sales of Tesla’s electric cars, already under pressure from increased competition from China, have taken a hit from Elon Musk’s association with the Trump administration. Deliveries fell by 13% in the quarter, but by much more in Europe (though in Britain, Tesla’s biggest European market, sales were up by 3.5%). After the earnings report, Mr Musk promised to spend more time at Tesla and reduce his work for the government rooting out alleged inefficiencies.
The race to develop faster charging times for electric-car batteries continued apace when CATL, based in China and the world’s biggest battery producer, announced that its latest product could charge a car in five minutes with a range of 520km (320 miles). BYD, Tesla’s biggest rival in China, recently said it could provide a range of 470km from a five-minute charge.
The European Union fined Apple €500m ($570m) and Meta €200m in the first penalties to be imposed for stifling competition under the EU’s Digital Markets Act. Apple was fined for hindering communications between app developers and customers over pricing; Meta for telling users they must either allow their private data to be used for advertising or pay subscription fees. Both companies criticised the EU for levying the fines.
Despite shutting down for a day in March because of a power outage, Heathrow airport reported a decent increase in revenue and profit for the first quarter.
UnitedHealth Group’s share price failed to recover from the hammering it took after the company lowered its profit forecast. The health insurer blamed an unexpected rise in demand for medical services from older customers. Its stock slumped by 22% in a day. Brian Thompson, the CEO of UnitedHealthcare, was murdered in December in Manhattan.
Regulatory oversight
The United Arab Emirates is set to take a gigantic leap of faith and use artificial intelligence to help write legislation, according to reports. The UAE has invested heavily in AI, with Abu Dhabi creating a state fund for the technology. Still, observers think allowing AI to take control of a country’s laws is a brave step, given its tendency to “hallucinate”, or make things up.