Only China can save global growth – Print

"The United States – May Enter Recession Within 24 Months", According to Saxo Bank Analyst

Avoiding a Great Trade War scale, as well as the resulting volatility, as monetary and financial stability is crucial for China's economic future, thus saving global economic growth, Christopher Dembik, director of macro-analysis at Saxo Bank, in a report.
According to the analyst, it is likely that the United States (United States) could enter a recession within a maximum of 24 months if trade tensions turn into a real war.
"The global economic situation is out of sync, with a downward trend in the US and US dollar, while the European economic situation has deteriorated and these developments look rather bleak. it is used, may not touch the new minimum, "says Dembik.
The analyst Saxo notes that a year ago he warned of the risk of economic slowdown and of global synchronization. "Since then, the global PMI (no indicator of economic health for production and services) has further declined, the markets dominated by the US dollar are causing tension, geopolitical risk increases and a stronger dollar causes problems for emerging markets
In just a few quarters, the trend towards dependence on the United States and the US dollar has replaced the paradigm of an economy synchronized world, "says Dembik.
The euro zone, the biggest disappointment in 2018

While the general opinion tends to be optimistic about 2018 overall, the economic situation has deteriorated very quickly, according to the analyst at Saxo Bank. Christopher Dembik explains: "The Citi Economic Surprise index (which shows the evolution of economic data compared to the consensus forecasts of market economists) for the euro area has fallen into negative territory since the beginning of this year, reaching its lowest level since 2016. shows a mediocre performance of the G10 (Group of the most industrialized states). "
According to the analyst Saxo, the decline in the money supply of the population, with the contraction of the dynamics of loans (-0.3% of GDP in the first quarter of 2018), confirms that the l? "pink" image of a "strong eurozone" something of the past and that a new loan cycle began to be more restrictive.
"Until now, the l? Negative impact of the tightening of monetary policy has been limited, as aggregate demand is stimulated especially by exports, and much of the SNF (no near-field communication) so they do not need loans to banks, but it's only a matter of time before they've … ", says Dembik
NFC is a wireless technology that allows users to Make payments by placing a compatible device (smartphone or card) within a few centimeters of other compatible devices (terminal, tablet, smartphone). [196] 59005] The trade war and the deterioration of financial conditions: an explosive cocktail

According to analyst Saxo, to date, the negative consequences of the trade war have only been one limited impact on economic growth.
"We have seen prices rise to US imports such as washing machines – with prices up 20% over the last two months, but the overall effect is minimal. Most estimates show that the "war" measures would have at most a cost of 0.1% of the GDP of China or the United States, which is not a big deal, "says Dembik. responsible for Saxo Bank, other examples in history, such as the Japanese machinery quota imposed by the Reagan administration in 1981, show that the impact can be very small if a war total commercial is avoided
Christopher Dembik adds: "Yet history teaches us that trade restrictions even affect the states that impose them." Japanese car prices have "cost" 60,000 jobs in America in the years 1980. Everything is that President Trump seems obsessed with and, as in any soap opera, everything can become dusty at any time. ECB: If the United States imposes 10% duties on all imports and trading partners react with the same measure, America enters recession

Experts from the European Central Bank have calculated that On all imports, and trading partners respond with the same measure, America enters recession in up to 24 months, and the global growth trend will be 3%.
C & # 39; "is a serious situation," says analyst Saxo Bank, adding, "Given the fact that we see how financial conditions are deteriorating, things can become dangerous if the war intensifies. The "political noise" has failed to increase the dynamics of lending, reduce the cost of capital and the volume of liquidity: from our point of view, it is unlikely that the current new protectionist creates a new crisis in itself. to be the "Chinese Fall". "
Next, the official of Saxo Bank points out that, from his point of view, not everything is as bleak as it may seem.
Christopher Dembik explains:" Until 1945, "he said. now, China reacted to the United States with the same piece without seeking escalation: if Beijing wanted a real trade war, the simplest would have been to send health inspectors to Chinese companies. the United States and their closure for a few months, the impact would certainly have been higher than the fee increase decided by Beijing
Abstention, China seems to play the role of patience and support the # Global economy: China has decided to ease its monetary policy for the third time this year, and the country is doing what it has always done when it slows down the economy: it intervenes to stimulate growth and push the dynamics of lending to the sector in The latter is still in contraction, around minus 1.9% of GDP, but could exceed zero earlier than expected m, if the Chinese authorities decide that it is time to further support the economy, against the economic war.
According to Saxo Bank analyst, China has several options to counteract the impact of trade tensions.
Dembik mentions: "It can relax monetary policy or stimulate tax incentives, Credit momentum growth is expected to offset some of the effects of US duties on Chinese imports and could also support some declining sectors, such as the market. It is difficult at this stage to anticipate the evolution of US trade policies, but it is almost certain that Beijing will try to avoid a total war and the resulting volatility because financial and monetary stability is crucial for development. China's economic future "
From the analyst's point of view of Saxo Bank, the evolution of US trade policy, which now targets imports of German cars, is very unpredictable, but it is almost sure that Beijing will do its best to avoid a large-scale trade war, the resulting volatility, because monetary and financial stability is crucial for China's economic future.