‘Shallow recession’ likely in the US as economy slows, trade war weighs on global growth, CLSA says
- US economic growth could slow to 1 per cent next year, weighing on export-dependent economies, according to CLSA economist Eric Fishwick
- If global trade contracts in 2020, it would be protracted period of world negative trade growth since 2008, 2009, Fishwick says
The United States is likely headed towards a “shallow recession” and world trade could turn negative next year as a slowing economy and an escalating dispute with China weighs on global growth, according to Eric Fishwick, chief economist at Hong Kong-based investment bank CLSA.
If world trade growth contracts in 2020, it would be the first protracted period of negative growth since 2008 and 2009, the height of global financial crisis, he said.
“We are already at the weakest point in terms of global trade and global manufacturing since 2010, which has happened as a result of the US slowing from about 3.5 per cent to 2 per cent growth,” Fishwick said. “My fear is the US will continue to slow.”
Trade globally has been hit by a weakness in manufacturing, centred around Europe and China, combined with a decline beginning in the third quarter of 2018 in US import demand and manufacturing indicators, he said.
“Given the weakness of the rest of the world, the US needs to grow at more than 3 per cent to keep global trade and global manufacturing conditions relatively healthy,” Fishwick said.