As reported by The Guardian, the World Bank has warned that ongoing trade tensions could have “severe consequences” for global growth.
“Using conservative estimates to assess the risks to the world economy from rising economic nationalism of the kind promoted by Donald Trump, the Washington-based organisation warned of “severe consequences” for world trade and economic growth, with the harshest impact reserved for developing nations. Under the scenario outlined in its latest global economic prospects report published on Tuesday, the bank found a broad-based increase in the use of import tariffs worldwide – to the maximum levels permitted by the World Trade Organisation – would trigger a decline in global trade amounting to 9%.
While that would be similar to the drop experienced during the financial crisis of 2008-09, it warned the impact could be even greater if countries went further than the WTO rules.
At the same time as sounding the warning on trade, the World Bank maintained a forecast for steady global growth to persist this year and next, in a continuation of the favourable economic conditions that spread around the world last year. Global economic growth is forecast to remain robust at 3.1% in 2018, before slowing gradually. However, it warned there were growing risks since its last assessment made in January. Alongside the threat posed by economic protectionism, the bank cited potential upsets from financial markets as central banks raise interest rates. There are also risks from high levels of debt in some countries, including China.”