The global growth has reached its lowest levels in a decade as an aftermath of the trade tension between the United States and China.
The global economy risked coming into a new, lasting low-growth phase if both countries continue to shy away from the issue and hesitate on how to respond.
Since the 2008-2009 financial crises, the global economy will encounter its weakest growth in a decade; currently down 2.9% from last year’s 3.6% register.
The outlook had taken a turn for the worse since the May forecast where the global economy estimate assumed to grow 3.2% this year and 3.4% by 2020.
Laurence Boone stated that what looked like to be just temporary tension is revealing itself to be a long-lasting new state of trade relationships. She added that the global order that regulated trade is now gone and that we are now in a new era of less certain, more bilateral and even assertive trade relations.
Trade growth has fallen into a negative territory now from 5% after the recovery from the financial crisis in 2017, Boone emphasized. Meanwhile, trade tensions have knocked down investment growth from 4% 2 years ago to a current 1% standing, absolutely weighing down business confidence.
Boone revealed that the trade standoff was taking its toll on the US economy, hitting some manufactured products and triggering farm bankruptcies.
.7% cut on global growth will be anticipated if the deterioration of financial conditions prolong and further display uncertainty. Britain’s uncertainty over government policies was also seen taking its toll as it is leaning towards leaving the European Union.
In the event Britain leaves without a deal or it does have a relatively smooth exit, with fully operational infrastructure in place, its economy will decrease by 2%.
In general the euro area will not be soared from the negative aftermath of this trade clash between the USA and China. Such scenarion will bring its gross domestic product cut by half a percentage come 2020-2021. Eurozone growth was seen at 1%, slightly lower than May 2019’s 1.2% statistic.
