Project Syndicate: Global Trade Cycle Warnings

Growth in global trade has slowed since the 2008 debt crisis, and the trade cycle confronts many uncertainties in 2019, including Brexit, a US-China trade war and military conflicts that could ignite at any time. The International Monetary Fund has already revised its forecasts for global economic growth, from 3.7 to 3.5 percent. Stephen Roach, an economist and senior fellow at at Yale’s Jackson Institute for Global Affairs, anticipates similar adjustments to forecasts of global trade growth, which averaged 3.6 percent from 2012 to 2018, about half the pace posted 20 years before the crisis. Analysts blame reduced business capital spending, protectionism and pressures on global supply chains. Roach points the United States under Donald Trump withdrew from the Trans-Pacific Partnership and the Paris climate agreement, replaced NAFTA with a higher-cost USMCA, hiked tariffs against China and threatens withdrawal from the World Trade Organization and NATO. China and the European Union are the world’s leading exporters as well as the top importers after the United States. Hurting trade partners is not a sensible strategy, and Roach warns that in a tightly interconnected economy no country will escape the pain. – YaleGlobal