Trade policy uncertainty poses a significant threat to global economic growth, often more detrimental than tariffs themselves. Recent evaluations indicate that this uncertainty, along with broader global policy risks, will adversely impact business investments in key regions like the US, Europe, and China. An excess of uncertainty typically leads to hesitance among businesses and households, prompting them to postpone crucial financial decisions on investments, hiring, and major home purchases until the future appears more certain.
To navigate this issue, we formulated four scenarios reflecting trade policy uncertainty’s impact on private business investments in major economies. Each scenario reveals a notable decline in investment activity this year, a direct consequence of escalating uncertainty. These findings underscore the importance of stabilising trade policies to promote economic confidence and investment.
For deeper insights, our report discusses how ongoing trade policy uncertainty can shape global growth trajectories, the cascading effects on major economies’ investment, and the long-term consequences if this heightened uncertainty persists. Delve into our executive summary to understand these critical dynamics.
Trade policy uncertainty severely undermines global growth, especially affecting business investment in major economies. Businesses are likely to delay significant decisions under such uncertainty, with projections showing weakened investment this year. The ongoing research explores the long-term consequences of sustained trade policy uncertainty.
In conclusion, trade policy uncertainty is a formidable adversary to global economic stability, leading businesses to defer pivotal decisions that could enhance growth. By assessing various scenarios of uncertainty, it’s clear that immediate impacts on investment are evident, and prolonged uncertainty could stifle economies further. Addressing these uncertainties is crucial for fostering an environment conducive to investment and overall economic health.
Original Source: www.oxfordeconomics.com
