According to Goldman Sachs, the recent increase in trade policy uncertainty poses a significant downside risk to global economic growth. Hawkish Rhetoric and

Rising Trade Tensions Threaten Global Growth, Warns Goldman Sachs


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According to Goldman Sachs, the recent increase in trade policy uncertainty poses a significant downside risk to global economic growth.

  • Hawkish Rhetoric and Potential Trump Victory: The report highlights the increasingly hawkish tone surrounding global trade policy, with potential protectionist measures on the horizon. The possibility of a Donald Trump victory in the upcoming US presidential election further heightens these concerns, as his past policies involved imposing tariffs on imports.

  • Investment Chill: Businesses are likely to delay investments due to the unclear trade outlook. Goldman Sachs cites evidence from the 2018-2019 trade war, where companies in the US and Europe significantly reduced investments during that period of heightened trade tensions.

  • Growth Impact: Goldman Sachs estimates that a rise in trade policy uncertainty to the levels observed during the 2018-2019 trade war could lower GDP growth by around 0.3 percentage points (pp) in the US and a steeper 0.9 pp in the Eurozone. While they don't predict a full return to those levels, they acknowledge this as a moderate downside risk for growth in the latter half of 2024 and 2025, particularly impacting Europe.

Investor Takeaway:

The potential for renewed trade disputes adds another layer of uncertainty to the current economic climate. Investors should be aware of these risks and consider how they might impact their investment strategies.

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