Trade uncertainty below average in the Middle East

IMF report shows that trade uncertainty may affect global growth in 2019, but in some regions, like the Middle East, it remains moderately low.

From the Newsroom

São Paulo – Global trade uncertainty saw in Q1 2019 could reduce global growth by 0.75 percentage point this year, International Monetary Fund (FMI) reported this Monday (9). The survey shows, however, that uncertainty remains moderately low in the Middle East, Central Asia, and Africa.

Figures are part of the new IMF’s World Trade Uncertainty index. The body reports that increased uncertainty started around Q3 2018, coinciding with tariff increases by the United States and China. It then declined in Q4 2018 as both countries announced a tariff deal, but it significantly spiked again in Q1 2019 following a new expansion of tariffs.

The report also points out that increases in uncertainty usually foreshadow significant world output declines. Based on this, IMF believes that this could reduce global growth in 2019. IMF’s last report on this from last July foresaw a global growth at 3.2% in 2019 and 3.5% in 2020, both 0.1 percentage point above April estimate.

High levels of trade uncertainty have been recorded in key US trading partners such as Canada, Mexico, Japan and large European economies, and in many other countries geographically close to the United States and China. The recent rise in uncertainty has been felt the most in the Western Hemisphere, Asia-Pacific and Europe.

IMF believes that the level of uncertainty varies significantly across regions and income groups. “Advanced economies show the highest trade uncertainty, followed by emerging markets. While rising, trade uncertainty remains, on average, at low levels in low-income economies,” the body reported.

Translated by Guilherme Miranda

Sabah Arar/AFP

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