Bank of America has reduced its forecast for global economic growth – and blames Trump's trade war

• Bank of America Merrill Lynch returned Friday to 3.3% its forecast for growth in global gross domestic product, down 3.6%.
• The company cited the uncertainty of the US-China trade war and the lack of normalization of interest rates.
• Emerging markets in Europe, Africa and the Middle East are holding up against the challenges of global trade and are expected to see slight improvements in 2020, BAML said.

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Bank of America Merrill Lynch lowered its expectations for global gross domestic product growth on Friday, blaming the uncertainties of the trade war and the policy delay in weakening the outlook.

The company has reduced its forecast of global GDP from 3.3% to 3.3%. BAML has already lowered its forecast for 2019 from the level of 3.9% proposed in November.

The report cited several reasons for this negative adjustment. The first is the continuation of the trade war between China, which, according to BAML's global economist, Ethan Harris, "is already holding back growth in much of the world".

"The obvious story is that shocks related to political uncertainty – primarily the ever-evolving trade war – are starting to have a noticeable negative impact on growth," Harris wrote in a note to customers. "Trade has stopped growing because it is the weakest segment since the Great Recession."

The table below confirms this statement:

Bank of America Merrill Lynch

In the event that a final war truce is concluded, BAML remains concerned about other geopolitical disturbances created by Trump during his tenure.

"Even if there is an agreement, we are worried about the long list of things to do with the US trade war, including any monetary intervention and tariffs on the US dollar." other countries and products, "Harris said.

BAML also said that a lack of aggressive monetary and fiscal response had caused irreparable damage, adding that a "hoped for" normalization of inflation had begun to reverse as major economic powers were talking interest rate cuts.

Outside of the United States, the BAML report reveals how much the trade war has raised economic concerns in other markets. Japan's growth rate is expected to be lower than its usual trend due to "slowing uncertainties about world trade and trade war". Europe also faces poor growth prospects due to the trade war, Brexit and weak foreign demand.

But the firm says it's not just bad news. According to the report, emerging markets of Europe, the Middle East and Africa maintain strong growth. The bank expected a slight improvement in 2020 after small cuts in its forecast for 2019. He also congratulated the US economy for having achieved its longest economic expansion in history, describing this achievement as "no small feat" .

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