Since our meeting last October, the global economic order has changed. While the international community has benefited from an increase in trade and a reduction in barriers over many decades, the escalation of trade tensions and the imposition of tariffs have created strong headwinds for the global economy. The rise in trade policy uncertainty is unprecedented and is weighing on investment. Global growth is expected to continue at a moderate pace, but downside risks have intensified. Trade protectionism and fragmentation could hamper the smooth functioning of global value chains and negatively affect global trade dynamics, which have been a key engine of global growth and shared prosperity in recent decades.

Global inflation is projected to gradually decline amid easing labour markets in advanced…