Daily Management Review

Recession Fears Is A Growing Concern: Goldman Sachs


The trade war between the two largest economies in the world may find a trade deal by 2020.

Source: flickr.com; (CC BY 2.0)
Source: flickr.com; (CC BY 2.0)
Goldman Sachs Group Inc expressed its fear of recession approaching in under the shadows of “the U.S.-China trade war” as the concern seems to be growing, although the investment bank is expecting that both the countries will sign into a trade deal prior to the “2020 U.S. presidential election”. In a note to its clients, the bank states:
“We expect tariffs targeting the remaining $300bn of US imports from China to go into effect”.
Earlier this month, the U.S. President made an announcement of imposing “a 10% tariff on a final $300 billion worth of Chinese imports” from the 1st of September, which prompted China to suspend U.S. “agricultural product” purchase. Furthermore, the former termed the latter to a “currency manipulator”, while China denied any manipulation of “yuan for competitive gain”.
The trade dispute is concerned with various issues like “tariffs, subsidies, technology, intellectual property and cyber security, among others”. In fact, Goldman Sachs reduced its Q4 growth forecast for the U.S. by twenty bias points which brought the figures to “1.8% on a larger than expected impact from the developments in the trade tensions”.
While, three economists from the bank, namely “Jan Hatzius, Alec Phillips and David Mericle”, authored a note, which mentioned:
“Overall, we have increased our estimate of the growth impact of the trade war”.
The note also informed that the growing “input costs” resulted by the disrupted supply chain could push the U.S. companies to cut down on their “domestic activity”, while this kind of “policy uncertainty” could also bring down the CapEx spending of the companies.