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As I explained on CNBC:
Even the most optimistic assumptions are unlikely to change the trend of weak global growth.
Problem - Diagnosis - Slowdown - Trade - Tensions
There is a problem of diagnosis. The current economic slowdown is not entirely due to the trade tensions between the United States and China, but mostly due to a combination of debt saturation and end-of-cycle signals. These were quite evident in China months before any tariffs were announced.
The diminishing returns of the Chinese and eurozone stimulus plans have been clear since the end of 2016 and 2017, respectively. In the case of emerging economies, the 2018 weakness was just the result of years of building fiscal and trade imbalances betting on a constantly weakening dollar and low rates.
Reason - Economies - Result - Debt - Excess
The main reason why economies are slowing down is fundamentally the result of the debt excess of the past years, not trade wars. With global debt rising above 300 percent of gross domestic product, according to the Institute of International Finance, and very low productivity growth in developed countries, it’s not surprising that additional units of debt fail to deliver the expected growth, while excess capacity hinders investment and trade.
Low interest rates and high liquidity have also generated collateral damages. A recent study by the National Bureau of Economic Research concludes that aggressive monetary policies lead to “rising market concentration, reduced dynamism, a widening...
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