Trade tensions between the U.S. and China pose a greater worry to the global economy than a nuclear North Korea, said National Australia Bank Ltd. chief economist Alan Oster.
The probability that the world’s two largest economies enter into a destructive trade war is around one-in-five, Oster said in an interview in Singapore. It’s the biggest risk to global growth that’s otherwise chugging along at a decent rate and should rise to 3.6 percent in 2018 from 3.4 percent this year, he said.
“It would kill Asia, and it would kill commodities,” and have flow-through effects to the world, said Oster, a former senior adviser to Federal Treasury in Australia, one of the world’s most China-reliant economies. “Overall, I think the world’s okay. Geopolitical risk is there a lot — who knows about North Korea — but I’m more worried about Trump and China.”