UBS Analysts Lower Global Growth Forecasts Amid Trump Tariff Uncertainty
April 22, 2025
UBS analysts have once again downgraded their global economic growth forecasts, citing heightened uncertainty surrounding U.S. President Donald Trump’s aggressive tariff policies. The Swiss investment bank now projects a sharper slowdown in global trade and economic activity for 2025, with significant impacts expected across major economies, including China, India, and the Eurozone.
Revised Growth Projections
UBS has slashed its 2025 growth forecast for China to 3.4% from 4%, reflecting the severe impact of U.S. tariffs, which currently stand at 145% on Chinese imports. For India, the bank lowered its FY26 GDP growth projection to 6% from 6.3%, driven by a 27% U.S. tariff and broader global trade deceleration. In the Eurozone, UBS revised its 2025 GDP growth forecast to 0.5% and 2026 to 0.8%, with Germany expected to face the brunt of 20-21% tariffs on exporters.
The World Trade Organization (WTO) echoed these concerns, warning that global merchandise trade could decline by 0.2% in 2025, a sharp reversal from its earlier 2.7% growth projection. The WTO attributes this downturn to Trump’s tariffs and their spillover effects, which could lead to the heaviest trade slump since the COVID-19 pandemic.
Trump’s Tariff Regime
Since early April, Trump’s administration has imposed “reciprocal” tariffs on imports from over 180 countries, with China facing the steepest levies. While some consumer electronics were exempted and certain tariffs paused for 90 days, the unpredictability of Trump’s trade policies continues to rattle markets and disrupt supply chains. The International Monetary Fund (IMF) has also flagged these policies as eroding productivity and driving inflation, projecting slower global growth and higher inflation for 2025.
Analysts at UBS noted that the “tariff shock” stems not only from the tariffs themselves but also from their unpredictability, which has dampened business sentiment and investment. For instance, China’s first-quarter GDP growth of 5.4% exceeded expectations, but UBS warns that this momentum will likely reverse as tariffs bite into exports.
Sectoral and Regional Impacts
The tariffs are already affecting industries and markets worldwide. In the UK, distributor Bunzl saw over £2 billion wiped from its value due to soft North American sales and macroeconomic uncertainty. In the tech sector, Infosys’ ADR shares dropped over 4% on the NYSE after reporting an 11.75% profit decline, partly attributed to trade uncertainties. Taiwan has extended short-selling curbs to mitigate market volatility, while the European Central Bank cut interest rates to counter weakening growth prospects.
China’s neighbors, such as Vietnam and Indonesia, face an “impossible choice” between aligning with the U.S. or maintaining ties with China, further complicating global trade dynamics. Meanwhile, companies like Nothing are shifting strategies, with CEO Carl Pei announcing plans to boost exports from India to navigate the trade war.
Policy Responses and Outlook
UBS analysts suggest that domestic demand and policy support could cushion some impacts. In India, rural recovery and anticipated rate cuts may bolster consumption, while China is expected to roll out additional stimulus to counter tariff pressures. However, the IMF warns that protectionism could lead to sustained inflationary pressures, complicating monetary policy normalization globally.
As trade tensions escalate, the global economic outlook remains precarious. UBS and other institutions, including Goldman Sachs and the Bank of Japan, have signaled a cautious approach, with policymakers likely to hold off on aggressive measures until tariff policies stabilize.
Disclaimer: The views expressed are those of UBS analysts and do not necessarily reflect the broader market consensus. Investors are advised to consult certified experts before making decisions.
