WASHINGTON (AFP) – Economists have become more concerned about US growth prospects, citing trade friction as the major worry, but recession risks have receded slightly, according to a survey released on Monday (Oct 7).

Nearly half of the panel surveyed by the National Association for Business Economics expect a recession before the end of next year, down from 60 per cent in the prior survey.

The panel expects the world’s largest economy to slow, with growth falling below 2 per cent for the first time since 2016, the survey showed.

Recent data have shown the US labour market remains strong, but manufacturing is in recession while the larger services sector is slowing, giving rise to fears about the health of the US economy, especially amid President Donald Trump’s grinding trade war with China and increasing tensions with Europe.

The NABE panel “turned decidedly more pessimistic about the outlook over the summer, with 80 per cent of participants viewing risks to the outlook as tilted to the downside,” said Gregory Daco, the group’s survey chair and chief US economist at Oxford Economics.

“The rise in protectionism, pervasive trade policy uncertainty, and slower global growth are considered key downside risks to US economic activity,” he said in a statement on the findings in the quarterly survey.

Looking further out, 69 per cent of the panel expects a recession by mid-2021.

The Federal Reserve has cut interest rates twice this year and many market analysts expect more stimulus to be announced later this month, but the NABE panel was less convinced.

Daco said over 40 per cent anticipate at least one more rate cut this year, while three-quarters of respondents expect at least one rate cut by the end of 2020.

The median forecast by the panel is for growth of 2.3 per cent this year, slowing to 1.8 per cent next year after 85 per cent of the panel cut their real GDP projections.

US-China trade war could lead to global recession: Wang Yi

Caption: 
State Councillor and Foreign Minister Wang Yi, the Chinese government’s top diplomat, addressing the annual United Nations General Assembly at the UN Headquarters in New York on Friday. Representing China on the international stage at the UN, Mr Wang vowed firmness during his blunt speech and took a clear swipe at United States President Donald Trump.

Credits: 
PHOTO: EPA-EFE

Caption: 
CHINESE STATE COUNCILLOR AND FOREIGN MINISTER WANG YI

UNITED NATIONS • The Chinese government’s top diplomat has said that tariffs and trade disputes could plunge the world into recession and Beijing was committed to resolving them in a “calm, rational and cooperative manner”.

In a blunt speech to the annual United Nations General Assembly on Friday, State Councillor and Foreign Minister Wang Yi said: “Erecting walls will not resolve global challenges, and blaming others for one’s own problems does not work. The lessons of the Great Depression should not be forgotten.”

Taking a clear swipe at United States President Donald Trump, who started a damaging trade war with China nearly 15 months ago, Mr Wang added, without naming the US leader: “Tariffs and provocation of trade disputes, which upset global industrial and supply chains, serve to undermine the multilateral trade regime and global economic and trade order.

“They may even plunge the world into recession.”

Representing China on the international stage at the UN, Mr Wang vowed firmness.

“Let me make it very clear: China is a country with a 5,000-year civilisation, 1.4 billion hardworking and courageous people, and a vast land of 9.6 million sq km. China will not ever be (cowed) by threats, or subdued by pressure,” he said.

In successive rounds of tit-for-tat tariffs, the US and China have levied punitive duties on hundreds of billions of dollars of each other’s goods, roiling financial markets and threatening global growth.

A new round of high-level talks between the world’s two largest economies is expected in Washington in the first half of next month.

Mr Wang’s remarks, unusually pointed for a Chinese diplomat, coincided with word that the Trump administration is considering radical new financial pressure tactics on Beijing, including the possibility of delisting Chinese companies from US stock exchanges.

NOT CONSTRUCTIVE

Erecting walls will not resolve global challenges, and blaming others for one’s own problems does not work.

CHINESE STATE COUNCILLOR AND FOREIGN MINISTER WANG YI, on the trade war between the US and China.

US and Chinese rhetoric on trade last week had seesawed between harsher and more conciliatory, with Mr Trump issuing a sharp rebuke of China’s trade practices and state-led development model in his speech before the General Assembly last Tuesday, adding that he would not accept a “bad deal”.

On the same day, Mr Wang warned the US not to interfere with China’s sovereignty.

But last Thursday, he said China was willing to consider increased purchases of farm products and predicted that talks would lead to a resolution if both sides took more steps to improve goodwill.

Mr Trump said last Wednesday a trade deal with China could come sooner than people think, and praised the Chinese purchases.

At the UN, Mr Wang also took aim at Mr Trump’s policy on North Korea, in which groundbreaking talks between Pyongyang and Washington have stalled, largely over the US refusal to ease punishing sanctions.

Mr Wang said that it was necessary for the UN to consider invoking the rollback terms of North Korea-related sanction resolutions “in the light of new developments” in the Korean peninsula “to bolster the political settlement of the peninsula issue”.

He said the realistic and viable way forward was to promote parallel progress in denuclearisation and the establishment of a peace mechanism to gradually build trust through phased and synchronised actions.

Mr Wang criticised the US withdrawal this year from a treaty governing intermediate-range nuclear missiles, and said China was against the deployment of such missiles in the Asia-Pacific region.

He said China would continue to take an active role in the international arms control process and added that it has initiated domestic legal procedures to join the Arms Trade Treaty.

REUTERS, AGENCE FRANCE-PRESSE

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