The ongoing trade war between the world’s two biggest economies is now a reality and could have material impact on global growth, London-based Fitch Ratings said.
In the September edition of its Global Economic Outlook (GEO) Report, the credit rating agency said the trade war between China and the United States could hinder the global economy.
“The trade war is now a reality,” Fitch chief economist Brian Coulton said in a statement.
While the tariffs battle may have no direct impact on the Philippines, the country could sustain an indirect hit, Cid Terosa, dean of the University of Asia and the Pacific School of Economics, said.
“Directly no, since we are a small player in the world market,” Terosa noted.
“Indirectly, however, it can create downward pressure on growth—particularly when trade wars between big players affect our trading activities or relationship with them,” he said.
Coulton noted recent developments in the US-China trade war would have a serious impact on global economic prospects.
“The recently announced imposition of US tariffs on a further $200 billion of imports from China will have a material impact on global growth and, even though we have now included the 25 percent tariff shock in our GEO baseline, the downside risks to our global growth forecasts have also increased,” he said.
China has canceled mid-level trade talks with the United States and the proposed visit to Washington by vice premier Liu.
Fitch said it reduced its China growth forecast by 0.2 percentage points to 6.1 percent this 2018.
It downgraded its global growth forecast by 0.1 percentage points to 3.1 percent.
As the situation tends to worsen, another economist cautioned against taking sides, noting that the trade war will have an impact on the Philippines economy which reinforces the need to look toward other trading partners.
“The US and China trade war, for instance, will definitely affect us as both are our major trading partners. Taking sides will not help as we have independent stakes between them,” said John Paolo Rivera, an independent economic consultant.
“That’s why it’s important to expand our network of trading partners to reduce exposure,” he said. —VDS, GMA News