Trade war threats: ‘Global growth may take up to 100 bps hit’


The Indian Express
 June 05, 2018


Global economic growth could slow down by 1 percentage point – or more than a quarter of the expansion rates projected by various international bodies — if US President Donald Trump’s tariff threats against China and others escalate into a full-blown trade war, S&P Global’s chief economist cautioned on Monday.
Speaking to CNBC’s “Squawk Box Europe”, Paul Gruenwald, chief economist at analytics firm S&P Global, said while it may not be a global recession but “one could imagine a scenario where rather than global growth in the threes we have global growth in the twos, where you get the US and Europe and China all pulling back at the same time”.
Analysts have said any such slowdown will also impact India, which witnessed economic growth touching a seven-quarter high of 7.7 per cent in Q4FY18 and goods exports scaling a three-year peak last fiscal.
The International Monetary Fund (IMF) has predicted global growth at 3.9 per cent for 2018 and next year, against 3.8 per cent in 2017. According to the Organisation for Economic Cooperation and Development, global GDP growth could inch up a tad in 2018 to 3.8 per cent, compared with 3.7 per cent in 2017. The threats of a trade war resurfaced late last month, as the US, after signalling a thaw, announced it was proceeding with plans to impose 25 per cent tariffs on $50 billion worth of Chinese goods, sparking angry reaction from Beijing that threatened retaliatory action.
Last Thursday, the US hit some of its closest allies, slapping tariffs on steel and aluminium from Europe, Mexico and Canada, after initially exempting them from this tax that is also applicable to supplies from countries like India. Consequently, at a meeting of the finance ministers of G-7 nations last Friday, the US had to face attack by these countries that also sought to retaliate and mount challenges with  the World Trade Organisation (WTO). India has already dragged the US to the WTO over duties on steel (25 per cent) and aluminium (10 per cent). Commerce minister Suresh Prabhu is visiting the US next week to flag India’s concerns
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