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
Australia's June quarter GDP growth driven by consumer and government spending
Australia's economy has shown unexpected resilience in the June 2025 quarter, with household and government consumption driving growth despite a significant decline in public investmentRead more
Economy
Australia's GDP surprise is real but operators should heed the growth mix warning light
Australia’s June-quarter growth beat expectations on the strength of household consumption and government spending, even as public investment sagged. The upside surprise signals resilience, but the ...Read more
Economy
Households carried the quarter: what Australia’s upside GDP surprise means for strategy now
Australia’s economy expanded faster than expected in the June 2025 quarter, with GDP up 0.6 per cent quarter-on-quarter and 1.8 per cent year-on-year — the strongest pace in two years. The kicker ...Read more
Economy
Inflation dynamics in Australia: Electricity subsidies and labour market in focus
In a recent economic analysis, experts from State Street have highlighted significant developments in Australia's inflation landscape, attributing the changes primarily to the withdrawal of ...Read more
Economy
Australia's economic growth driven by consumer and government spending: A closer look at the June quarter
Australia's economy has delivered a surprising performance for the June 2025 quarter, surpassing expectations with a growth rate of 0.6% quarter-on-quarter and 1.8% year-on-year. This unexpected ...Read more
Economy
Australian and Korean leaders meet to unlock billions in new trade opportunities
In a significant effort to bolster economic ties and explore new avenues for investment, Australian and Korean leaders, alongside business executives and government officials, are gathering in Seoul ...Read more
Economy
Australia’s growth beat is real — but it’s the wrong kind for capacity
Australia’s economy outpaced forecasts in the June quarter as households opened wallets and government spending did the heavy lifting, even as public investment sagged. The signal for boardrooms: ...Read more
Economy
Australia’s growth is back—but it’s the wrong kind of strong
GDP surprised on the upside in the June quarter, powered by households and government outlays even as public investment slumped. The Reserve Bank stayed hawkish, signalling that sticky services ...Read more
Economy
Australia's June quarter GDP growth driven by consumer and government spending
Australia's economy has shown unexpected resilience in the June 2025 quarter, with household and government consumption driving growth despite a significant decline in public investmentRead more
Economy
Australia's GDP surprise is real but operators should heed the growth mix warning light
Australia’s June-quarter growth beat expectations on the strength of household consumption and government spending, even as public investment sagged. The upside surprise signals resilience, but the ...Read more
Economy
Households carried the quarter: what Australia’s upside GDP surprise means for strategy now
Australia’s economy expanded faster than expected in the June 2025 quarter, with GDP up 0.6 per cent quarter-on-quarter and 1.8 per cent year-on-year — the strongest pace in two years. The kicker ...Read more
Economy
Inflation dynamics in Australia: Electricity subsidies and labour market in focus
In a recent economic analysis, experts from State Street have highlighted significant developments in Australia's inflation landscape, attributing the changes primarily to the withdrawal of ...Read more
Economy
Australia's economic growth driven by consumer and government spending: A closer look at the June quarter
Australia's economy has delivered a surprising performance for the June 2025 quarter, surpassing expectations with a growth rate of 0.6% quarter-on-quarter and 1.8% year-on-year. This unexpected ...Read more
Economy
Australian and Korean leaders meet to unlock billions in new trade opportunities
In a significant effort to bolster economic ties and explore new avenues for investment, Australian and Korean leaders, alongside business executives and government officials, are gathering in Seoul ...Read more
Economy
Australia’s growth beat is real — but it’s the wrong kind for capacity
Australia’s economy outpaced forecasts in the June quarter as households opened wallets and government spending did the heavy lifting, even as public investment sagged. The signal for boardrooms: ...Read more
Economy
Australia’s growth is back—but it’s the wrong kind of strong
GDP surprised on the upside in the June quarter, powered by households and government outlays even as public investment slumped. The Reserve Bank stayed hawkish, signalling that sticky services ...Read more
