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Global economy: should survive the horse trading

Heightened trade tensions between the United States and China - and the resultant tariffs - are a big deal, according to ANZ Chief Economist Richard Yetsenga.

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But they’re unlikely to be the thing that brings the global economy crashing down.

" The global economy faces some serious structural issues.”

Speaking on a panel at ANZ’s 2019 Debt Conference in the Hunter Valley, Yetsenga argued the tariffs, which affect less than 4 per cent of global trade, are not the doomsday scenario many suspect.

“It's just not conceivable the impact of tariffs is going be the thing which destroys the global trade cycle,” he told delegates at the conference.

“It doesn't look like the trade issue is going to disappear. I just don't think it's the thing that's going to bring the cycle unstuck.”

You can listen to his comments on the podcast below.

Yetsenga reminded delegates that just a year ago the very suggestion of a trade war was seen as crazy. Now some do believe it is “the thing that's going to ruin us”.

“The global economy - and domestically in fact - faces some serious structural issues,” he said. “But if you followed the popular narrative this time last year the structural issues didn't exist.”

“I think the reality actually is somewhere in the middle.”

Yetsenga conceded export growth was negative in some countries but said history suggests only a truly big problem – such as the global financial crisis or the dot.com bust – would see that last for an extended period.

“Is it conceivable that tariffs… are the big thing that's going to bring the global trade cycle unstuck?” he said. “It's not to me.”

Shane White is Content Manager, Institutional at ANZ

 

This article was originally published on ANZ’s Institutional website

 

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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