ING joined the ranks of banks warning about an escalating US-China standoff, saying global trade is likely to suffer its worst year since the financial crisis in 2009.
The Dutch bank sees world trade growing just 0.2% this year under its central scenario that includes United States tariffs on all Chinese goods, as well as on auto imports from Europe and Japan.
Should the parties come to an agreement, there’ll be a compensatory rally and trade growth will accelerate to about 2% in 2020, according to authors Raoul Leering and Timme Spakman.
Already, manufacturing figures in Asia and Europe have signaled economic momentum is dropping and Wall Street’s biggest banks have issued warnings to investors of growing risks.
Economists at Citigroup Inc. say a full scale global trade war could push annual global economic expansion down to about 2% a year from now, the weakest since the aftermath of the financial crisis, as the imposition of tariffs would harm financial markets and business confidence.
Under a better scenario, where the United States strikes deals without the imposition of additional tariffs, ING sees a slightly better outcome, with 0.5% trade growth.
Its least optimistic scenario — escalation with no deal at the end — would mean little better than stagnation in 2019, with 0.1% growth. The pickup in the year 2020 would be modest, just about 0.6%.