The fallout of the US-China trade war, Brexit, and reduced factory orders are expected to harm the global economy going forward.
Back in April, the WTO estimated that global trade in merchandise would rise by 2.6% for 2019. Now, the WTO estimate has been cut by more than half to 1.2%. Even if the situation improves slightly, this would mark the slowest growth seen since the 2008 financial crisis. When it comes to the reasons why, we have to start with the ongoing trade war between the world’s two largest economies. The trade war has caused US imports from China to go down by 12% from January to July 2019. Chinese imports from the US have been reduced by an even more drastic 28%.
As the trade war has raged on, economic activity in Europe has slowed down as factory orders slide over Brexit fears. There are concerns that should Brexit be pushed through at the end of October without a deal, the entire European economy will feel the impact. Indeed, Brexit is expected to cause several industries to take a particularly hard hit, including auto manufacturing, import/export, and financial services.
Despite the varying concerns, WTO director-general Roberto Azevêdo primarily blames trade disputes. Roberto explains that “resolving trade disagreements” is critical to the well-being of the global economy.