World trade is on course for its worst year since the financial crisis, with only 0.3 percent growth anticipated in 2019, according to Dutch bank ING.
In its analyst note seen by CNBC, the bank said that the downturn in world trade growth at the end of last year has been aggravated by damage from the ongoing US-China trade war.
ING Head of International Trade Analysis Raoul Leering projected that 2020 is likely to show growth of about two percent. That improvement could be wiped out if the trade war drags on into next year, he said.
Leering suggested that trade will adjust to better-than-expected first-quarter economic growth in the US, the Eurozone, and China. He, however, noted that the volumes of global trade still have substantial catching up to do before they can match those of last year.
ING analysts calculated that trade will grow no more than 0.3 percent in 2019, the worst year since the “great collapse of trade” in 2009.
They presented three possible scenarios, showing the effect of US policy on world trade.
The first scenario assumed that recent tariff hikes and threats are enough to force China, Mexico, the EU, and Japan to strike trade deals with the US by the end of the first quarter of 2020.
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The second and most likely scenario suggested that things will “get worse before they get better,” with an initial escalation in the US-China trade war and negotiations with the EU, Mexico, and Japan before deals are struck in the first quarter of 2020.
The third and most catastrophic scenario for world trade assumed continuing escalation without results. That involved Washington imposing a 25 percent tariff hike on all Chinese goods, hiking car tariffs by 20 percent at the end of the six-month delay period in November, and levying a tariff hike of 10 percent on half of the other imports from Japan and the EU after they retaliate in kind.
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