The Iran war is expected to drag the global economy to its slowest growth since the start of the pandemic, the World Bank said Thursday. The group expects GDP growth to fall to 2.5% this year and has cut its forecasts for two-thirds of countries since January. The toll is steepest on developing countries, as it always is.
Rising borrowing costs are another challenge to growth. The European Central Bank raised interest rates Thursday, becoming the first of the world’s advanced-economy central banks to do so, and this week’s high US inflation numbers put pressure on the Federal Reserve — and its new chair — to do the same this year. Consumer prices rose 4.2% in May and wholesale prices rose 6.5%. Traders are putting two-thirds odds on at least one rate hike, and possibly as many as three, by the fall, according to CME data.
