The global economy is likely headed for a recession in 2020 and the economic downturn will accelerate if the China-US trade squabble turns into a full-blown trade war, says Supavud Saicheua, an adviser to Kiatnakin Phatra Financial Group.
His forecast is based on the assumption that the world's economic recovery cycle lasts 10 years.
Mr Supavud said 65% of global fund managers with combined assets of US$500 billion (16.6 trillion baht) surveyed by Bank of America remarked that a global economic recession is likely in 2020.
After Donald Trump was elected president, the US economy expanded at 2-3% and unemployment fell to 4.5%, he said, adding that Mr Trump cut taxes and raised spending but his policies' momentum is expected to lose steam in 2020.
With the US's expansionary policies, the Federal Reserve must raise the policy rate and the market expects the rate to reach 3% after two increases this year and three more next year, Mr Supavud said.
Mr Trump's economic policies will lead to a budget deficit of $1 trillion next year, he said, while the trade spat between the US and China also poses a threat to the global economy.
Although the trade rift between the economic behemoths could benefit Thailand, the global trade mechanism will be distorted, leading to a global slowdown, Mr Supavud said.
Moreover, the trade rift could dent investor sentiment and delay plans, he said.
The US-China trade rift will initially boost Thailand's exports, which account for 70% of the country's GDP, as importers rush to place orders before the US places retaliatory tariffs, but export growth will slow, Mr Supavud said.
He predicts that the negotiations between the US and China will fail to reach any conclusion, as the US's demands for China to cancel the Made in China 2025 strategy, a blueprint for Beijing's plan to become a high-tech manufacturing base, are unacceptable to the Chinese government.
Citing people familiar with the situation, Bloomberg News recently reported that US and Chinese officials were looking for ways to reopen trade talks amid the trade tit-for-tat.
But the AP reported that China's government warned of retaliation if Washington imposes new trade penalties, following a report that the Trump administration would propose increasing the tariff rate on an additional $200 billion in Chinese imports.