Global outlook: Growth continues but there is a new risk  - Wells Fargo


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Analysts at Wells Fargo, remain positive on the continuation of growth across the global economy but they point out that there is a new risk with trade tariffs. 

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“The global economy has continued to move forward with what has been, so far, a synchronized global economic expansion with few notable exceptions, i.e., Venezuela. While reflecting the improvement in global economic growth, more and more central banks in the developed world are starting to follow the U.S. Federal Reserve in raising interest rates.”

“The recent tit-for-tat measures between the United States and China regarding trade tariffs are raising eyebrows across the global economy. Much of the growth today has been driven by an improvement in trade flows across the globe. If this new tough talk between the two largest economies in the world continues, it could generate issues for the global economy and for global trade flows going forward. However, we do not expect other countries to join the United States or China at this point, so the probability of a global trade war remains unlikely.That is not to say that a potential trade fight could not affect economic growth going forward; it could, as these are the
two largest economies and the largest engines of growth for the global economy.”

“This new risk, which did not exist several months ago, has been added to the potential performance of the global economy. The fact that global growth has been driven in the past several decades by an expansion of trade across the world, raises the risks to growth from a potential trade war.”

“We remain positive on the continuation of growth across the global economy, while acknowledging the risk recent actions pose for the potential performance of the global expansion. We anticipate that calm heads will ultimately prevail in this new trade spat, as global growth has been driven in the past several decades by an expansion of trade across the world.”

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