The global economy is recovering from the effects of the financial crisis, but risks remain from rising trade barriers that could harm markets and disrupt supply chains. The US-China trade war and Brexit negotiations are adding to uncertainty. Brexit is already reducing UK business confidence and increasing inflation, and consumer prices are expected to rise faster than wages, potentially causing public dissatisfaction. Developing countries should re-evaluate their trade policies to focus on demand from countries with open markets and stable growth.

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Maurice Obstfeld, the International Monetary
Fund’s chief economist, noted that 2018 posted
the strongest global economic growth since
2011. The world is starting to recover from the
effects of the global financial crisis. According
to the IMF, however, risks to global recovery
and growth still remain, and a rise in trade
barriers will harm financial markets. It could
also lead to disruption of global supply chains
and the diffusion of new technologies around
the world.
Unfortunately all this is happening at a time
when global investors are also closely watching
the UK and EU trade negotiations as part of
Brexit, the UK’s decision to leave the EU. Trade
experts suggest that in the short term the UK is
bound to experience lower levels of trade and
growth as non-UK production facilities need to
finalize their relocation, licensing and future
investment decisions. Already the uncertainty
surrounding Brexit has brought costs in terms of
reduced business confidence and a hike in
inflation in the UK and the region. It is expected
that consumer prices in the UK will increase
faster than wages, which could cause resentment
across the board. This in turn will also apply
economic pressure to the UK’s trading partners.
Going forward, it is now increasingly important
that developing economies should revisit their
national trade and industrial policies and direct
their future production incentives and trade
preferences towards products that are in demand
in countries with lower trade barriers, higher
consumer confidence, a stable economic-growth
outlook, and the potential for supply-chain
integration.
– Dr. Vaqar Ahmed is the joint executive director of
the Sustainable Development Policy Institute,
Pakistan (SDPI). His book ‘Pakistan’s Agenda for
Economic Reforms’ was recently published by the
Oxford University Press.
Twitter: @vaqarahmed
http://www.arabnews.com/node/1289421