Concerns about global trade have reached nearly 10 times the peaks seen in previous decades and could shave about 0.75 percentage point off world economic growth this year, according to data compiled by the International Monetary Fund.
The Americas and Asia-Pacific are most affected by concerns about the U.S.-China trade war, while Africa is least affected, the IMF said Monday in a new index aimed at quantifying trade uncertainty.
The index is based on reports from the Economist Intelligence Unit dating back to 1996 and borrows from methodology used in the IMF’s own World Uncertainty Index. To calculate the new gauge, IMF researchers counted how often the word “uncertainty” appears in the EIU reports near terms such as “tariffs,” “protectionism” or “trade.“
Following 20 years of stability, the World Trade Uncertainty index started to climb around the third quarter of last year, coinciding with tariff action by the U.S. and China, according to the IMF. After a brief respite the index rocketed up in the first quarter of 2019, reflecting a substantial increase of U.S. tariffs on Chinese imports on March 1, the IMF said.
While trade uncertainty has generally been rising across the globe, the increase was much higher for advanced economies. It remained “moderately low” in the Middle East, Central Asia, and Africa, according to the IMF.
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