LONDON, (Reuters) – Global economic growth is likely to stabilize at a new, slower pace, although China, trade wars and rising protectionism threaten the “delicate equilibrium”, Bank of England Governor Mark Carney said.
The Governor of the Bank of England, Mark Carney speaks at an FT event in London, Britain February 12, 2019. REUTERS/Hannah McKay
He pointed to a shift towards tighter financial conditions from rising in interest rates, as well as trade tensions, as reasons for the recent slowdown in the world economy.
Rising debt in China and new barriers to global trade were a “significant and growing” risk to the global outlook for growth, and protectionism was already having an impact, Carney said in a speech at a Financial Times event on Tuesday.
“Given the confluence of the current broad-based slowdown and outstanding downside risks, some are beginning to wonder whether the global expansion, begun in 2010, could be starting to end,” Carney said.
“While there are pockets of risk and global growth is still decelerating, the combination of the policy response and the state of the current imbalances in advanced economies suggest that global growth is more likely than not to stabilize eventually around its new, modest trend.”
“But this is a judgment, not a guarantee. The world is in a delicate equilibrium.”
Carney added that “it isn’t easy to win a trade war”, referring to remarks made by U.S. President Donald Trump in March last year that trade wars were “good, and easy to win”.
On Brexit, Carney said it was in everyone’s interests to find a solution that works for all in the weeks ahead.
“In many respects, Brexit is the first test of a new global order and could prove the acid test of whether a way
can be found to broaden the benefits of openness while enhancing democratic accountability,” Carney said.
The United Kingdom is on course to leave the European Union on March 29 without a deal unless May can convince the bloc to a
mend the divorce deal she agreed in November and then sell it to skeptical British lawmakers.
Reporting by Andy Bruce and David Milliken, editing by William Schomberg