Phase One Trade Deal to Have Limited Impact on US Economic Growth: Reuters Poll

Phase One Trade Deal to Have Limited Impact on US Economic Growth: Reuters Poll

Posted Friday, January 24, 2020 by
Arslan Butt • 1 min read

A recent Reuters poll indicates that the phase one trade deal between the US and China is expected to show no significant impact on US economic growth this year, but will only serve to reduce downside risks or drive a moderate uptick in activity. Although there was considerable optimism in global markets about the US and China signing the partial trade deal, the poll reveals almost no change in economic growth and inflation expectations.

On the back of the IMF trimming global growth forecasts for this year, the Reuters poll also shows that the US economic growth is not expected to show a significant improvement in 2020. Economists cite the limited scope of the first phase deal as the key reason why it would fail to make much of an impact on the US economy.

Meanwhile, while the Fed has indicated its interest in adopting a wait and watch approach with regards to US’s monetary policy for now, economists feel that the next move will be a rate cut instead of a hike. The increased expectations for a more dovish Fed are also likely to weigh on economic growth in the US this year.

According to economists polled, the likelihood of the US slipping into a recession this year stay around 20-25%, while the possibility of a recession within the next two years is slightly higher, at 30-35%. On the positive side, however, economists unanimously felt that the partial trade deal would serve to reduce downside risks to the US economy.

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