Global GDP could fall 10 trillion USD because of protectionism

The global economy could lose $ 10,000 billion by 2025 if governments do not eliminate or reduce tariffs and non-tariff barriers are blocking goods trade.

In the open trade scenario, experts from Boston Consulting and HSBC believe that the commercial value will increase by 2-2.6 percentage points per year, stimulating GDP growth from 1.8-2.3 percentage points. the same year.

Comments above are experts Boston Consulting Group and HSBC summarized and pointed out in the Report “10,000 billion USD for open trade” has just been submitted to governments of G20 countries. The report “US $ 10 trillion for Open Trade” jointly conducted by Boston Consulting Group and HSBC stated that high tariffs and trade restrictions could cause global GDP to lose US $ 10,000 billion per year, slowing. possibility of economic recovery after Covid-19.

Using a well-proven model to analyze the effects of trade flows on economic growth, the team compared two scenarios for commodity flows between G20 countries. Specifically, in the first scenario (open trade scenario), trade activity is maintained with high openness and is based on rules while in the second scenario (protective trade scenario), the level trade restrictions were pushed to the maximum, including an increase in average global tariffs and continued imposition of tariffs related to US-China trade tensions.

Research results show that, in the first year, both scenarios have similar economic effects, but then they start to change direction. Under the protection scenario, the value of traded goods and GDP are both leveled off, while in the open trade scenario, the trade value increases by 2-2.6 percentage points per year, stimulating GDP growth from 1 , 8-2.3 percentage points per year. The above research results are only based on commodity trade. If trade in services is included, the effect of easing trade restrictions will be higher.

Mr. Sukand Ramachandran, CEO of Boston Consulting Group, said: “In the context of the global economy struggling with the effects of the Covid-19 pandemic, the above analysis shows that trade benefits every country, as well as the global economy. general”.

According to the World Trade Organization (WTO), import restrictions that are in place from 2019 and are still in effect have an impact on approximately 10.3% of the G20 countries’ import value, equivalent to approximately 1,600 billion USD.

Ms. Natalie Blyth, Head of Global Trade and Accounts Accounts at HSBC, commented that trade is playing its role in ensuring the economic recovery after Covid-19 and policies (trade – BTV) more open will give the global economy a favorable start counted by trillions of dollars.

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