The World Bank has published a report titled "The Turning of the Tide?" that suggests that current trends in the global economy may to lead to a new crisis by 2020. Global economic growth is likely to slow down after 2018, when it is expected to reach 3.1%, but is predicted to fall to 2.9% in 2020.
One of the key reasons behind this potential slacking is the reemergence of protectionist policies, currently being championed by US President Donald Trump, the report points out. According to it, emerging and developing economies (EMDEs) will suffer the most from these policies.
"Escalation of trade restrictions among major economies could derail global trade, with particularly adverse consequences for EMDEs," the report says.
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Among other harmful tendencies stressed in the World Bank's report are deteriorating national debt dynamics, geopolitical tensions, heightened policy uncertainty, rising global interest rates and possible financial market volatility.
US President Donald Trump announced the introduction of 25% import tariffs on steel and 10% tariffs on aluminum for many countries, including its allies, in a bid to "fix the trade balance." Canada, Mexico and European countries were temporarily relieved of the measure, but when the deadline arrived, Trump decided not to prolong the relief.
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Many countries have promised to impose retaliatory measures on US goods, while China, which did not receive temporary relief, did so within days after the US tariffs were announced. At the same time, Trump suggested to some of the countries targeted by the new trade barriers, namely Canada and Mexico, that they strike new bilateral trade agreements. The latter two expressed their desire to preserve the existing NAFTA framework instead, but didn't take the bilateral option off the table.
