Goldman Sachs weighed in on the US-China trade war in a note to clients on Sunday.
In the letter to their clients, Goldman Sachs analysts said that a trade deal between the world’s two largest economies shouldn’t be expected before 2020. The company now expects that the trade war will drag American economic growth back by 0.6% on recent developments. This 0.6% figure represents a serious weight on the US economy, and is a significant increase upon previous estimates of 0.2%. To make matters even worse, the latest trade war news has caused Goldman Sachs to reduce its fourth-quarter growth forecast by 1.8% as the trade war holds the economy down. As Goldman Sachs’ chief US economist Jan Hatzius explains, “The drivers of this modest change are that we now include an estimate of the sentiment and uncertainty effects and that financial markets have responded notably to recent trade news.”
The trade war has proven to be bad news for both the US and China, though it’s unlikely that either country will back down soon. In other news from Hong Kong, the global financial hub is cancelling all air departures for Monday amid anti-government protests. Protesters have occupied the airport, which is one of the busiest in the world, causing immigration officials and airlines to tell travelers to not go to the airport. Officials have said that arrivals into Hong Kong will be allowed to land, but other all other flights are cancelled.
Hong Kong has seen months of massive protests over a new extradition law which would allow Hong Kong residents to be deported to mainland China on criminal charges. There are fears that such a law would be used to deport political activists to the mainland, where freedom of speech protections that exist in Hong Kong would not protect them from charges.
