Global Trade Watch – Potential impact from protectionism

by: Arjen van Dijkhuizen

  • World trade growth has been weak in recent year. This is due to two reasons. 
  • First, overall global economic growth has been weak. 
  • Second, contrary to the experience of at least the last hundred years, world trade has failed to grow faster than the world economy as a whole.
  • The latter is partly due to the changing development of global supply chains, as well as other shifts in the global economy and a rise in non-tariff protectionist measures.
  • The global economic outlook is surrounded by an unusually high degree of uncertainty regarding the policy stance towards globalisation and free trade in some of the world’s key economies. While we expect world trade growth to pick up this year, any acceleration will be modest.
  • Our base scenario assumes new multilateral trade initiatives will be set aside, but that full-blown trade wars will not occur.
  • Escalating trade conflicts would seriously harm the global economy. Small open economies will, in theory, be most vulnerable.
  • For the Netherlands, being a small and open economy, EU Membership and access to the Single Market will be essential to maintain the standard of living. The Netherlands is also one of the countries most at risk from Brexit, given the relatively strong economic ties with the UK and the related vulnerability for obstruction to trade flows and depreciation of the pound sterling.

For more information, please download our Global Trade Watch

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