(Reuters) – The trade battles being pursued by U.S. President Donald Trump’s administration are likely to lead to fairer but still free global trade, said Mohamed El-Erian, chief economic advisor at the Allianz Group, Europe’s largest insurer.
However, there was still a 1-in-4 chance of a full blown global trade war that could lead to a hard landing in China and a global recession, El-Erian told the Reuters Global Markets Forum in an exclusive interview on Wednesday.
There is significant scope for more volatility in emerging markets due to potential forced selling on the back of stop-losses, El-Erian said. Contagion risks, though limited for now, could increase “if bad technicals become bad economics and finance,” with the least liquid markets being in the greatest danger, he added…
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