In light of greater trade tariffs imposed by countries like China and the USA, Deloitte chief economist discusses why protectionism is so harmful to the global economy and the damage it is doing to world growth.
The seventh Global DIY Summit kicked off this morning with powerful morning sessions, including a presentation from Deloitte chief economist and head of research Dr Alexander B?rsch. In his global economic and political overview, he addressed a number of key issues or ‘shocks’ having an impact worldwide, from Brexit and trade, to the emergence of “superstar firms with high digital intensity”.
Most powerful was his warning of what restrictive, protectionist trade tariffs will mean for the worldwide economy. Protectionism is defined as the practise of shielding a domestic industries from foreign competition by taxing imports.
Addressing delegates at the international conference in Dublin, Dr B?rsch said: “World trade is one of the key components of world growth and really powers it… Normally world trade would see double the growth of GDP but now it’s in line with GDP. It means GDP lost one of its engines. “
He explained that, since 2016, there has been a very clear upward trend in protectionist tariff measures and a decline in liberating tariff measures, which he believes will result in a de-globalisation of the world economy. He warned: “We are facing a less integrated and less globalised economy”.
Discussing Brexit Dr B?rsch said: “We need to hope for the best and prepare for the worst. It is a big risk and it should be part of risk surveys and planning amongst European companies.”
He added: “Some people think things won’t change but that’s a bit optimistic.”
In other key takeaways, he talked about the increased productivity of firms with higher digital intensity but urged companies to think about their organisational structure, adding that firms that are more de-centralised have a greater productivity potential.
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