What are the main risks threatening the robustness of global growth and trade in 2019? According to the latest "Economic Outlook" published by Crédito y Caución, the list is headed by the proliferation of trade wars.
The report notes that the “temporary” truce between the United States and China ended unexpectedly with a “ surprise escalation when an agreement was expected to be imminent .” For the same reason, the extension of the conflict to the European Union “ is not unlikely, despite the previous truce between the President of the European Commission and the President of the United States. If this materializes, global GDP growth will suffer a further impact .”
The impact of the trade war increases the risks of a possible forced slowdown for China, which has resorted to monetary and fiscal stimulus to address its slowdown. While this has helped maintain GDP growth, it will further increase debt levels, which are already very high. The impact would be felt through commodity markets, where prices depend especially on Chinese demand, and neighboring countries integrated into the value chain of Chinese exports.
Following the trade war and a sharp slowdown in China, the main risks to global growth would be misguided policy by the Federal Reserve, the high level of political uncertainty stemming from phenomena such as Brexit or the Italian government's agenda, and the volatility of oil prices.
