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According to Krishen Rangasamy, analyst at National Bank Financial, de-escalation of the U.S.-China trade war does not mean the threat of protectionism has disappeared.

Key Quotes

“The U.S. is once again contemplating using Section 232 of its Trade Expansion Act to impose tariffs on grounds of national security, this time on auto imports. If enacted, those tariffs would not only disrupt global trade but could also potentially tip already-weakened economies of Japan and Germany into recession.”

“Add the possibility of a hard Brexit to the mix and it’s not difficult to imagine a scenario whereby global growth falls under 3%. However, our base case scenario assumes common sense prevails among policymakers as to leave global trade flows largely unimpeded, which explains why we’ve left unchanged our forecast of 3.5% for world GDP growth this year.”

“After enjoying a strong 2018, the U.S. economy now seems to be taking a breather. The services sector moved down a gear in the aftermath of January’s government shutdown, the latter estimated to have trimmed roughly half a percentage point from Q1 growth. That said, we’re keeping unchanged our 2019 growth forecast of 2.3%, expecting a sharp rebound in the second quarter.”