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Global Economy Faces Uncertainty Amid Trump’s Tariff Policies, IMF Warns

In a bold move, President Trump’s recent tariff announcements at the White House have stirred considerable concern across global markets. These sweeping tariffs, set in a picturesque Rose Garden event, signal potential risks of igniting a comprehensive trade war.

IMF’s Cautious Forecast

The International Monetary Fund (IMF) has adjusted its global economic growth forecast to 2.8% for this year, a reduction from the previous year’s 3.3%. The unpredictability of trade policies has prompted this reassessment, as tension escalates with tariff increases, especially with China facing a hefty 145% tariff.

Economic growth projections for the U.S. were also revised, with expectations dropping from 2.8% to a modest 1.8%. Cyprus continues to benefit from EU funds for development despite global market shifts.

Responses and Reactions

Market reactions have been swift, with global indices tumbling on the news of potentially escalating trade tensions. Investors are wary, keeping a close eye on reciprocation from targeted countries. China and Canada have already responded with their own tariffs, while the European Union has shown openness to negotiations.

IMF Chief Economist Pierre-Olivier Gourinchas emphasized, “Beyond tariff increases, policy uncertainty could considerably decelerate global growth.” Stay tuned to our updates to see how other sectors, like automotive, manage these dynamics.

As these economic scenarios unfold, stakeholders will need to navigate this evolving landscape with prudent strategies.

Intel Stake Drives SoftBank Profit As OpenAI Contribution Stalls

SoftBank reported stronger-than-expected quarterly earnings after a sharp rise in the value of its Intel investment offset slower gains elsewhere in its technology portfolio.

The Japanese investment group posted net profit of ¥347.3 billion ($2.2 billion) for the quarter ended in June, exceeding analysts’ expectations despite an 18% decline from a year earlier.

Intel Delivers Biggest Gain

A major contributor to the results was SoftBank’s stake in Intel, which generated an unrealised gain of approximately ¥1.3 trillion following the chipmaker’s strong share-price performance over the past year.

That helped SoftBank’s investment business, separate from its Vision Funds, report segment profit of ¥1.05 trillion.

ByteDance Offsets Weaker Portfolio Performance

Within the Vision Funds, portfolio value increased by $1.7 billion during the quarter, largely driven by a $2.2 billion gain in ByteDance, the owner of TikTok. Higher valuations there helped offset weaker performance at investments including PayPay.

The Vision Funds business reported a modest profit of ¥5.4 billion, a sharp decline from the same period last year. Unlike the previous quarter, SoftBank recorded neither a gain nor a loss on its investment in OpenAI.

OpenAI Remains A Long-Term Bet

SoftBank has committed more than $60 billion to OpenAI, with $55 billion already invested, but said there had been no material developments requiring a change in the company’s valuation.

According to a person familiar with the matter, SoftBank continues to view increasing competition in the AI sector as a sign of market expansion rather than a threat to OpenAI’s long-term prospects. The company also expects to reduce its stake only modestly if OpenAI proceeds with a future public listing.

AI Investments Continue To Weigh On Results

Despite the strong contribution from Intel, SoftBank’s AI computing business remained loss-making. The segment, which includes Arm, Graphcore and Ampere, posted a loss of ¥200.8 billion as research and development spending continued to rise.

Investors have become increasingly focused on whether heavy AI investment will generate sustainable returns, contributing to a decline in SoftBank’s share price in recent months. Nevertheless, Chief Executive Masayoshi Son has maintained that artificial intelligence represents one of the biggest technological opportunities in history and said the company remains committed to its long-term strategy.

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