JOHANNESBURG – The World Bank issued a stark warning yesterday on the impact of the US and China trade war, which made a global recession by 2020 likely.
The global economy is expected to slow to 2.9 percent in 2019, compared with 3 percent in 2018.
Growth in the US is expected to slow to 2.5 percent this year from 2.9 percent in 2018, while China is expected to grow at 6.2 percent this year compared, with 6.5 percent in 2018, the World Bank said.
“The outlook for the global economy has darkened. Financing conditions have tightened, industrial production has moderated, trade tensions have intensified, and some large emerging market and developing economies have experienced significant financial market stress,” the bank said. “Faced with these headwinds, the recovery in emerging market and developing economies has lost momentum.”
It warned that the possibility of escalating trade restrictions involving major economies remained elevated despite the temporary pause in tariff hikes agreed by the US and China during the G20 meeting in early December 2018 and the successful negotiation of the new US-Mexico-Canada Agreement, which have somewhat tempered trade policy uncertainties.