ZCZC
BCN-08
TRADE-BANK-ECONOMY-REPORT
Protectionism threatens ‘vintage’ global growth: BIS
GENEVA, June 25, 2018 (BSS/AFP) – A year of “vintage” economic growth
could be undone by rising protectionism, the Bank of International
Settlements (BIS) said Sunday, as fears of an all-out global trade war ramp
up.
The BIS, often described as the central bank of central banks, credited “a
decade of extraordinary monetary policy,” for leading the world out of the
2008 financial crisis.
That culminated in 2017 with “a vintage year for growth with low
inflation,” the BIS said in its Annual Economic Report, which also warned of
possible trouble ahead.
“An escalation of protectionist measures… could trigger a fresh
downturn,” the bank said.
The report was launched days after the European Union slapped tariffs on
iconic US products including bourbon, jeans and motorcycles in its opening
salvo in a trade war with President Donald Trump.
Brussels imposed the raft of duties on US products worth 2.8 billion euros
($3.3 billion) in a tit-for-tat response to Trump’s decision to slap stiff
tariffs on European steel and aluminium exports.
Within hours, Trump responded with a threat to impose a 20 percent tariff
on cars imported from the European Union.
But the BIS underscored that the consequences could be devastating if
reciprocal protectionist measures undermine overall confidence in the “open
multilateral trading system.”
“Indeed, there are signs that the rise in uncertainty associated with the
first protectionist steps and the ratcheting up of rhetoric have already been
inhibiting investment,” the BIS said.
Leading policymakers and analysts generally agree that while limited tit-
for-tat tariffs would be manageable, a full-out trade war would cripple
growth.
BIS general manager Agustin Carstens credited free and open trade with
laying “the foundation for much of the global progress in improving living
standards,” and urged policymakers to safeguard it.
Based in Basel, Switzerland, the BIS is owned by the central banks of 60
top global economies.
BSS/AFP/HR/0945