Invest
Will tensions threaten the world’s economic recovery?
The fallout from the COVID-19 pandemic has led to a blame game, with Australia and its allies calling for an inquiry into the virus and the Chinese government responding with tariffs on international trade.
Will tensions threaten the world’s economic recovery?
The fallout from the COVID-19 pandemic has led to a blame game, with Australia and its allies calling for an inquiry into the virus and the Chinese government responding with tariffs on international trade.
Following Prime Minister Scott Morrison’s calls for an investigation into the start of COVID-19, the Chinese government has put pressure on Australia through a barley tariff as well as new inspection procedures over Australia’s iron ore sent to China.
The world’s second-largest economy has also threatened Australia’s agriculture sector, with Australia’s largest exports in dairy and wine at risk.
China is also facing renewed tensions with the United States as the two largest economies renewed a war of words, despite only recently signing a free trade agreement.
Nikko Asset Management chief global strategist John Vail commented on the issue of the US-China trade dispute, noting “there are a multitude of factors that could further harm US-China relations”.
“The markets are not particularly concerned about such as they believe Trump will not extend measures that would cause great harm before the election six months from now,” Mr Vail said.
The asset manager also noted China’s willingness to take on the West over COVID-19.
“China also seems willing to accept increased pressure by the US, and even by much of the Western world, without major reprisals, except that it seems to be using trade restrictions as a method for punishing Australia for its desire for an independent inquiry into the virus’ origins and restrictions on China’s 5G equipment,” Mr Vail said.
However, Mr Vail does not believe tension will stop the economic recovery, stating it will likely be a Nike swoosh shape recovery.
“A checkmark/swoosh type of recovery is likely, but the right tail is unlikely to be a straight line, with the late 3Q being the maximum acceleration period, and a bit slower or choppy afterwards.
“Inflation will be very hard to measure, with many prices rising sharply in order to compensate for social distancing. Air travel and restaurants will likely be much more as luxuries for many.
“Industry consolidations will likely occur globally and government involvement in economies will remain very large, especially in the national security/supply chain aspects, as well as financing of struggling industries,” Mr Vail concluded.
RELATED ARTICLES
About the author
About the author
Economy
CPI data another piece in RBA's interest rate decision puzzle, says REIA
The latest Consumer Price Index (CPI) data from the Australian Bureau of Statistics (ABS) shows that inflation rose 3.4% in the 12 months to February 2024, unchanged from the previous two months, ...Read more
Economy
Including passive job seekers in unemployment measure doesn't impact economic cycle view, study finds
New research from e61 Institute has found that while current unemployment measures may not capture all job seekers, broader definitions that include passive job searchers do not provide better ...Read more
Economy
Survey reveals heightened job security concerns among IT workers in 2024
A recent survey conducted by Authority Hacker has revealed that 89.66% of IT workers in the United States have increased concerns about job loss in 2024. Read more
Economy
Australian founders adapt to the challenging fundraising environment with optimism and strategic shifts
The landscape for start-up funding in Australia has been increasingly challenging, but this has not dampened the spirit of the country's entrepreneurs. Read more
Economy
Signs point to possible US economic 'soft landing' in ClearBridge analysis
The US economy may be steering towards a 'soft landing' despite mixed signals from the stock market, according to a recent analysis by ClearBridge Investments. Read more
Economy
Alternative fund managers predict capital raising surge in 2024
Alternative investment fund managers are predicting a sizable increase in capital raising efforts in 2024, according to a global study by Ocorian, a leading alternative investment fund administratorRead more
Economy
Understanding the economic indicators that affect your earnings
The landscape of personal finance is profoundly influenced by broader economic trends and indicators. Read more
Economy
Navigate market turbulence with expert advice: no crystal ball needed
In an era fraught with investment market uncertainties, from fluctuating interest rates to geopolitical strife, seasoned market experts are guiding investors through the mire, offering sage advice on ...Read more
Economy
CPI data another piece in RBA's interest rate decision puzzle, says REIA
The latest Consumer Price Index (CPI) data from the Australian Bureau of Statistics (ABS) shows that inflation rose 3.4% in the 12 months to February 2024, unchanged from the previous two months, ...Read more
Economy
Including passive job seekers in unemployment measure doesn't impact economic cycle view, study finds
New research from e61 Institute has found that while current unemployment measures may not capture all job seekers, broader definitions that include passive job searchers do not provide better ...Read more
Economy
Survey reveals heightened job security concerns among IT workers in 2024
A recent survey conducted by Authority Hacker has revealed that 89.66% of IT workers in the United States have increased concerns about job loss in 2024. Read more
Economy
Australian founders adapt to the challenging fundraising environment with optimism and strategic shifts
The landscape for start-up funding in Australia has been increasingly challenging, but this has not dampened the spirit of the country's entrepreneurs. Read more
Economy
Signs point to possible US economic 'soft landing' in ClearBridge analysis
The US economy may be steering towards a 'soft landing' despite mixed signals from the stock market, according to a recent analysis by ClearBridge Investments. Read more
Economy
Alternative fund managers predict capital raising surge in 2024
Alternative investment fund managers are predicting a sizable increase in capital raising efforts in 2024, according to a global study by Ocorian, a leading alternative investment fund administratorRead more
Economy
Understanding the economic indicators that affect your earnings
The landscape of personal finance is profoundly influenced by broader economic trends and indicators. Read more
Economy
Navigate market turbulence with expert advice: no crystal ball needed
In an era fraught with investment market uncertainties, from fluctuating interest rates to geopolitical strife, seasoned market experts are guiding investors through the mire, offering sage advice on ...Read more
