Global economy faces uncertainty as lame-duck Trump enters final two years

Donald Trump's loss of control of both the House and Senate in the US midterms has put the global economy on notice for an unpredictable final two years of his presidency, with significant implications for markets, growth, and inflation. Analysts say the prospect of a highly erratic lame-duck president could affect stock markets, which initially dropped but rallied as investors weighed the results, while his "Mr Veto" warning raises the prospect of a turbulent finale. The Democrats' expected tougher line on AI regulation and potential for more aggressive foreign policy are key concerns. The Iran war and its energy price shock remain the dominant factor, with Brent crude above $100 a barrel and the IMF forecasting global inflation at 4.7% this year. Political gridlock could restrict fiscal stimulus but also limit borrowing, while US growth is forecast to slow to about 1.5% by 2028.