EU on brink: Bloc’s economy clobbered by Brexit worries and US/China trade war
The latest figures published by the Organisation for Economic Co-operation and Development (OECD) reveals trade remained weak across all G20 regions in the third quarter of 2019. A statement issued by the Paris-based organisation warned: “The slowdown was particularly pronounced in the European Union, with exports contracting by 1.8 percent and imports by 0.4 percent.
“Exports and imports fell across all major EU economies, with declines of 3.6 percent and 1.7 percent, respectively, in France, and of 0.4 percent and 1.8 percent, respectively, in Germany.
“In Italy, trade fell for the sixth straight quarter, with exports and imports decreasing by 1.2 percent and 1.0 percent in Q3 2019.”
The UK was not immune from the effects either, with exports contracted by 3.3 percent and imports by 1.6 percent.
Timme Spakman, an economist at Dutch banking corporation ING, said: “European merchandise trade has been impacted significantly by uncertainty surrounding the trade war and Brexit.
“The slowdown of German industry had an impact on European trade, as German producers ran down inventories rather than importing new intermediates”.
Writing last month, Robert Basedow, an assistant professor in International Political Economy at the LSE’s European Institute, said the trade war between China and the US posted three challenges for the EU.
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He said: “First, the US-China trade war limits global growth prospects and may push fragile economies notably in the EU into a recession.
“A recession is quite likely to rekindle economic and political tensions among EU member states and to complicate the various reform projects of the incoming von der Leyen Commission.
“Second, the trade war puts considerable stress on the World Trade Organization (WTO) and rules-based global economic governance.
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“US and Chinese actions indeed are hardly compatible with WTO law.
“The EU – and notably the European Commission – may have to adjust and learn how to operate in a different logic and context where geopolitics play a greater role.
“Third, the trade war and broader US-China tensions are likely to escalate the geopolitical situation in the Middle East.”
The OECD figures showed in North America, exports from the United States fell slightly, by 0.2 percent, while imports fell by 0.7 percent.
United States exports to China stayed well below the levels seen prior to the ongoing trade dispute, despite a pick-up in the second quarter (by 1.9 percent), while imports from China to the United States were down 2.1 percent.
Mexico’s exports and imports contracted (by 0.2 percent and 0.4 percent), while Canada recorded a 1.7 percent decline in exports but an increase in imports (of 0.4 percent).
Imports were also weak across all major Asian economies, contracting by 9.7 percent in India, 2.3 percent in South Korea, 1.8 percent in China, and 0.4 percent in Indonesia. However, in Japan imports picked up by 0.5 percent.
Exports fared generally better, increasing by 4.1 percent, 2.2 percent and 1.6 percent respectively, in Indonesia, Japan and China.
However, they contracted in India (by 3.1 percent) and South Korea (by 0.4 percent).
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