Citing 2019’s world economic performance as “the feeblest since the global financial crisis,” this month the World Bank reduced its economic forecasts through 2022.
The bank sees U.S. growth dropping below 2 percent due to unpredictable trade policies restraining investment and the costs that U.S. tariffs add to goods.
Europe’s economy will grow by only 1 percent in 2020, and China’s rate will dip below 6 percent for the first time since 1990, the bank predicts.
A better performance is possible only if the U.S. and China settle their trade war in a way that leads to “a sustained reduction in policy uncertainty,” according to the bank’s statement.
TREND FORECAST: As we have long noted, a trade deal between China and the U.S. will boost equity markets short term and will insignificantly boost economic growth… both of which have been artificially propped up with cheap money that will dry up.
For example, India’s economy registering seven consecutive quarters of declining growth is not a victim of the so-called “trade war.”
Again, according to the IMF, the trade war that is continually blamed for equity market swings will affect the global GDP by only 0.8 percent this year.
Therefore, regardless of the extent of the U.S.-China trade deal, it will do nothing to stave off 2021’s “Greatest Depression.”
