World markets on brink: Economic crisis to hit US, Germany, China hardest, Moody’s says

Thursday, November 8, 2018
By Paul Martin

GROWTH forecasts for the global economy have been slashed by ratings agency Moody’s who say the ongoing trade war between the US and China will cause shocks around the world.

Thu, Nov 8, 2018

Germany, Japan, South Korea, the US and China are among those who will be hit hardest next year, according to the Moody’s report.

Global economic growth will slow in 2019 and 2020 to just under 2.9 percent, down from an estimated 3.3 percent in 2018 and 2019, Moody’s said.

And the analysis has also suggested there is no end in sight to the disagreement, which could continue “for some time” – a concern previously expressed by Chinese billionaire Jack Ma, who on Tuesday reiterated his concerns about the “stupid” dispute.

The two superpowers have been at loggerheads ever since US President Donald Trump slapped punishing new tariffs of 25 percent and 10 percent respectively on Chinese steel and aluminium imports, triggering Beijing to respond with levies of its own on American exports.

Mr Trump has shown no signs of backing down on the issue, and warned on October 30 he had $267 billion in additional tariffs ready if the two countries failed to reach a deal on trade – although he also hinted this was a possibility.

Moody’s said the “geopolitical frictions” between US and China would “likely persist for some time”.

The slowdown is likely to have a negative impact not only on China and the US, but also on other open economies, especially Germany, Japan and South Korea, it said.

Growth in advanced economies will slow but remain solid next year, it predicted – but G20 emerging markets growth will be weak.

As such, Moody’s also said the dispute would weigh on global trade growth and reshape trade flows and supply chains.

It also suggested the United States-Mexico-Canada Agreement (USMCA) – a new trade deal to replace the North American Free Trade Deal (NAFTA) which Mr Trump has been a vehement critic of – would be ratified next year.

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