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Market insight: Trade conflict burdens global economy

It is becoming increasingly clear that the world economy has entered a slowdown. Industrial production has stagnated in large parts of the world and sentiment is falling. Growth in world trade has fallen significantly and the first half of this year saw zero growth.

The heightened trade conflict between the US and China, which is beginning to threaten the flow of materials in the manufacturing industry, is a strong contributing factor to the sharp slowdown in the world economy.

Growth in the global economy is slowing to around 3 per cent both this year and next year. While this does not represent a complete collapse, the growth rate is well below the historical average of 3.7 per cent for the period 2000–2018. It is the weakest figure in a decade. In fact, the global economy has only grown at a slower rate on two previous occasions since 2000; the first in connection with the burst of the IT bubble in 2001 and the second in connection with the financial crisis of 2008. So history tells us that the situation can change quickly and growth can fall rapidly.

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Date: 1 Oct 2019
Size: 8.6 MB(pdf)