- US imports from China fell by around 15% year on year in the first quarter of 
2019, according to July edition of PwC's Global Economy Watch 
-  Imports from a group of eight other Asian economies–Bangladesh, India, 
Indonesia, Malaysia, South Korea, Taiwan, Thailand and Vietnam–grew by more 
than 16%. 
- Rise of tariffs contributing to global slowdown in merchandise trade and 
manufacturing sectors 
- PwC's analysis points to growing global energy efficiency as area for 
substantial driver of growth  


The initial round of tariffs imposed by the US government on China imports 
earlier this year has started to make significant and demonstrable impacts on 
global trade, according to analysis released by PwC today.

The July edition of PwC's Global Economy Watch highlighted that US imports from 
China fell by around 15% year on year in the first quarter of 2019. This fall 
has created opportunities for other regional trading partners, with imports to 
the US from a group of eight other Asian economies–Bangladesh, India, 
Indonesia, Malaysia, South Korea, Taiwan, Thailand and Vietnam–growing by more 
than 16%.

Mike Jakeman, senior economist at PwC UK, says,

'Economics can sometimes lag behind politics, but we are now seeing hard 
economic data of the impact of US-China tensions. This has benefitted other 
economies in the region: if this trend continues it will contribute to faster 
economic growth in Vietnam, South Korea and Taiwan in particular.

'Yet if your goal is to primarily tackle trade imbalances, then bilateral 
tariffs are an imperfect tool: import substitution can simply re-create the 
problem elsewhere. So, as a result of Vietnam becoming more competitive than 
China, the US's trade deficit with Vietnam stood at $13.5bn in the first 
quarter, compared to $9.3bn in the same quarter a year ago.'

The July edition of Global Economy Watch also evaluates concerns about the risk 
of another global recession, as trade tensions impact on business sentiment and 
demand for exports. 

Mike Jakeman says,

'Certainly, the outlook for the world's biggest economies is less bright than 
it was 18 months ago. In early 2018 we witnessed the fastest and most 
synchronised growth since before the global financial crisis. Since then, the 
deepening of the trade conflict between the US and China, a series of stumbles 
in Europe and further struggles in slow-growing emerging markets have 
transformed sentiment among businesses and policymakers.

'However, slower growth in 2019 in each of the crucial markets of the US, China 
and the Eurozone is to be expected. The US benefited from a one-off tax cut in 
2018. The Chinese government continues to cool its economy very gradually, 
while the Eurozone is correcting after a couple of years of above-trend growth 
in 2016-17. That these three economies have cooled simultaneously has been 
alarming, but fundamentals remain strong.'

Growing energy efficiency offers opportunity for future

In a special report on global energy, PwC has also found that the world economy 
is using energy much more efficiently in the creation of economic growth. In 
1990 it required around 181kg of oil equivalent to produce $1,000 of global GDP 
in PPP terms. In 2015, it needed 123kg, an improvement in efficiency of more 
than one-third. We think this trend has further to run, which means that $1,000 
of GDP could be generated by 78kg of oil equivalent by 2040. Becoming more 
energy efficient is crucial in limiting climate change, while also ensuring 
that the global economy continues to grow and the world's population becomes 
more prosperous. 

The report identifies the two drivers of the trend as structural economic 
change and technological progress. It examines the impact of both drivers 
across the 20 countries who have experienced the largest improvement in energy 
intensity since 1990.

Mike Jakeman says,

'Our analysis suggests that we have made significant strides in raising our 
energy efficiency over the past 30 years, and our projections for the next 20 
suggest that there is still room for major improvement. 

'This is a positive story for the global economy, as it suggests that 
governments and businesses can continue to pursue climate change policies that 
limit energy consumption without eliminating economic growth.'

The latest Global Economy Watch is available to read here: 
https://www.pwc.com/gx/en/issues/economy/global-economy-watch.html

About PwC

At PwC, our purpose is to build trust in society and solve important problems.  
We're a network of firms in 158 countries with more than 250,000 people who are 
committed to delivering quality in assurance, advisory and tax services. Find 
out more and tell us what matters to you by visiting us at www.pwc.com. 

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which is a separate legal entity. Please see www.pwc.com/structure for further 
details. (C)  2019 PwC. All rights reserved.

Contact
David Bowden
Global Communications Manager
PwC
m: +44 (0)7483365049
e: david.bowden@pwc.com

Source:  PwC