A warning by the World Bank states that negative consequences equivalent to the 2008 global economic crisis could happen if the prevailing the trade tensions between the US and its major trading partners takes on a worldwide escalation.
According to the Washington-based organization, there could be “severe consequences” for the growth of world trade and economy where the hardest impact would be on the developing nations. The warning of the agency was based on conservative estimates for the assessment of the risks to the world economy because of rising sentiments and instances of economic nationalism such as the ones stoked by United States President Donald Trump.
The World Bank found that broad-based enhancement in the use of import tariffs globally to the maximum limit that is allowable under the regulations of the World Trade Organisation would result in a 9% decline in global trade., the results of the findings was published in the latest global economic prospects report by the Bank on Tuesday.
That drop in global trade would be similar to the rates seen during the 2008 global economic crisis according to the bank, which warned hat in case the tariffs go beyond the WTO permissible limit, the impact could be more sever.
Franziska Ohnsorge, the lead author of the bank’s report, said: “The threat of trade protectionism is a real risk. Anything that puts sand in the wheels of global trade is a risk to global growth.”
The trade dispute between the US and many of its traditional trading allies forms the back drop of the publication of the report by the World Bank - which is the s3econd global financial body alongside the International Monetary Fund.
There were angry responses from the EU, Mexico and Canada – traditionally largest trade partners of the US, following the imposition of tariff on the import of steel and aluminum from these countries into the US by the Trump administration. There is assumption that if this trend continues, it could undo efforts of arriving at apolitical consensus on free trade over decades.
There are also concerns about the trade tensions between the US and China and with similar threats of protectionism through import tariffs being issued by both the White House and Beijing.
Because of the manner in which major developed economies perform is often linked to the fortunes of economic development of developing economies and hence they would be the ones that would be hit most, says the World Bank report. There can be a fall in growth in of 1.1% throughout a year in a developing economy if there is a 1% decline in growth in the US, China or the euro area, Ohnsorge said.
While not providing specific details of the fall in global GDP because of a full-scale economic conflict she said: “Trade has been an important source of euro area growth, Japanese growth and a lot of emerging market economies are very linked to that growth.”
(Source:www.theguardian.com)
According to the Washington-based organization, there could be “severe consequences” for the growth of world trade and economy where the hardest impact would be on the developing nations. The warning of the agency was based on conservative estimates for the assessment of the risks to the world economy because of rising sentiments and instances of economic nationalism such as the ones stoked by United States President Donald Trump.
The World Bank found that broad-based enhancement in the use of import tariffs globally to the maximum limit that is allowable under the regulations of the World Trade Organisation would result in a 9% decline in global trade., the results of the findings was published in the latest global economic prospects report by the Bank on Tuesday.
That drop in global trade would be similar to the rates seen during the 2008 global economic crisis according to the bank, which warned hat in case the tariffs go beyond the WTO permissible limit, the impact could be more sever.
Franziska Ohnsorge, the lead author of the bank’s report, said: “The threat of trade protectionism is a real risk. Anything that puts sand in the wheels of global trade is a risk to global growth.”
The trade dispute between the US and many of its traditional trading allies forms the back drop of the publication of the report by the World Bank - which is the s3econd global financial body alongside the International Monetary Fund.
There were angry responses from the EU, Mexico and Canada – traditionally largest trade partners of the US, following the imposition of tariff on the import of steel and aluminum from these countries into the US by the Trump administration. There is assumption that if this trend continues, it could undo efforts of arriving at apolitical consensus on free trade over decades.
There are also concerns about the trade tensions between the US and China and with similar threats of protectionism through import tariffs being issued by both the White House and Beijing.
Because of the manner in which major developed economies perform is often linked to the fortunes of economic development of developing economies and hence they would be the ones that would be hit most, says the World Bank report. There can be a fall in growth in of 1.1% throughout a year in a developing economy if there is a 1% decline in growth in the US, China or the euro area, Ohnsorge said.
While not providing specific details of the fall in global GDP because of a full-scale economic conflict she said: “Trade has been an important source of euro area growth, Japanese growth and a lot of emerging market economies are very linked to that growth.”
(Source:www.theguardian.com)
