The IMF’s trade policy uncertainty index has been rising sharply since the beginning of trade tensions been the US and China in 2018, having been stable for about 20 years, a new report says, but the Middle East and Africa are not among those regions worst affected.
"The index showed increased uncertainty starting around the third quarter of 2018, coinciding with a heavily publicized series of tariff increases by the United States and China. It then declined in the fourth quarter of 2018 as US and Chinese officials announced a deal to halt the escalation of tariffs at the G-20 meeting in December in Buenos Aires. It significantly spiked again in the first quarter of 2019 following a substantial expansion of American tariffs on imports from China on 1 March," reads the report.
The index also found that increases in uncertainty foreshadow significant output declines, with the increase in trade uncertainty observed in the first quarter of 2019 forecast by the IMF to reduce global growth by up to 0.75 percentage points in 2019.
"High levels of trade uncertainty have been recorded in key US trading partners such as Canada, Mexico, Japan, and large European economies, and in many other countries geographically close to the United States and China," according to the IMF report.
Trade uncertainty remains moderately low in the Middle East, Central Asia and Africa, however.
The IMF created its trade uncertainty index in 1996. It features 143 countries.