The Strategist

OECD: Tariffs and uncertainty impede global growth

08/27/2019 - 06:25

A decrease in growth rates in the second quarter of 2018 was recorded in all large developed countries, follows from OECD data. Thus, in quarterly terms (seasonally adjusted), the total growth of the OECD countries in April-June slowed down to 0.5% against 0.6% in the first quarter (from 1.7% to 1.6% in annual terms).

Kitt Amaritnant
Kitt Amaritnant
The strongest decline occurred in the UK, where a 0.5% increase gave way to a 0.2% decline amid uncertainty over Brexit, and also in Germany - from a 0.4% increase to a 0.1% decline. Ерere, a drop in exports, including to China, negatively affected industrial production, and the Ifo Institute's business activity index in August fell to a minimum since November 2012. “The signs of recession in the German economy are intensifying,” the institute notes. In general, GDP in the second quarter grew only by 0.2% (0.4% a quarter earlier) in the euro area, while in Italy it turned out to be zero. In the US, quarterly growth slowed from 0.8% to 0.5%. In annual terms, the indicator remains the highest among G7 countries (2.3% versus 2.7% in the first quarter), but the Fed indicates risks of a weakening economy amid increased trade wars (at the last meeting, the regulator lowered the rate for the first time in ten years).

Vice Premier of China Liu He said that China “aims to solve the problem through consultations and interaction in a calm format.” “We are strongly opposed to trade wars,” he emphasized. And US President Donald Trump later said that Washington received two "very good" calls from Beijing with a proposal to return to the negotiating table (Beijing did not comment on this statement). “I think that we will have a deal, because now we are talking on due grounds, they understand it, and we understand it,” Mr. Trump said. “For the first time, I see that they really want to agree, this is a very good step,” he added.

Recall that the negotiations resumed after a personal meeting of the leaders of both countries at the end of June. However, the July round was unsuccessful, after which Washington announced the introduction of duties on the entire remaining volume of imports (from September 1 and December 1). The Chinese authorities, in turn, last Friday announced a decision to increase import duties in the amount of $ 75 billion. In response, Donald Trump threatened to increase imports tariffs by 5% for $ 550 billion.