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The US-China trade warfare could derail the global economy, warns OECD



The trade war between the United States and China that lasted last year could cause a disastrous $ 600 billion blow to the world economy.

This is the severe assessment of the Organization for Economic Co-operation and Development (OECD), which warned that a new escalation of the crisis could affect a global economy already weakened by slow growth and uncertainty.

In a biannual report published yesterday, the famous think tank predicted that global gross domestic product would fall to 0.7 percent in 2021, with uncertainties affecting the toughest advanced economies.

It expects world GDP to decline to 3.2 percent in 2019, compared with 3.5 percent last year and 3.8 percent in 2017.

"Commercial tensions have altered growth. With high uncertainty and low confidence, the investment has suffered, and the manufacturing sector has been successful," said OECD economist Laurence Boone .

Bloomberg Economics has had a similar image to the pessimist, and has accepted a "total trade war" that would reduce global GDP by 0.6% or "close to $ 600b" in relation to a "no commercial war scenario."

And if the rates imposed by the United States and China earlier this month will remain in force over the next two years, Bloomberg Economics predicts global GDP could be 0.3 percent lower than in the middle of 2021.

But, according to Chris Richardson, director of Deloitte Access Economics, the news is not bad, especially for Australia.

"The basic thing to remember about commercial wars are the two Ds: they are silly, but they are not terrible," he said.

"Clearly, there are good profits for the benefit of all the benefits of trade … including the withdrawal of one billion people from poverty during the last decade and a bit.

"But now we are in the middle of a lot of stupidity: it's this classic impulse and push in the yard."

Richardson said at this time that the US-China trade war had not yet significantly affected the global economy, although global trade had begun to decline.

But he said that Australia really benefited from the situation.

"Remember that, for Australia, there is this strange secondary effect, which is that, as China slows down, they generate stimuli that lead to additional construction and additional demand for things like steel," he says. to say.

"Thus, world trade wars and the slowdown in the global economy are, in fact, good news for Australia because the world gives us an increase in salaries."

He said that Australia would "benefit indirectly" from Chinese stimuli, as Australian farmers and the mining sector (coal and iron ore) were the main winners and, although the political decline in trade wars could adversely affect Australia , the economic repercussions were to a large extent positive.

However, Richardson said the situation could worsen because "egos are involved", although he said he had the risk of "exaggerating" what he could achieve.

"There is still the possibility that if the egos are kept under control, the damage to the world economy can still be less than what people are afraid of: it's silly, but it's not terrible, and there is a possibility of # 39, a result that is good for the world, "he said, adding that the situation could encourage China to open its economy even more.

Commercial war

For months, US President Donald Trump and Chinese counterpart Xi Jinping have been locked in an alarming commercial war.

Earlier this month, it increased its position after Trump increased the rates of 10% to 25% in Chinese products of $ 200,000.

Next, China retaliated by placing US $ 60 million import tariffs.


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