Uncertainty over U.S.-China trade tensions affects Italian economy, experts say

Source: Xinhua| 2019-08-28 13:18:39|Editor: ZD
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ROME, Aug. 28 (Xinhua) -- The escalating trade friction between the United States and China is affecting the Italian economic growth, and the most lasting effect may stem from uncertainty over the situation, observers have said.

The United States has imposed a series of tariffs on Chinese imports for more than a year, and China has imposed retaliatory levies as countermeasures amid volatile negotiations and an increasingly cloudy picture of what may happen next.

"It is the uncertainty that is causing the most lasting effects," Paolo Guerrieri, a former senator and professor of political economy at Rome's La Sapienza University, told Xinhua. "Not knowing what to expect makes everything a bigger challenge."

"When companies don't know what to expect, they stop investing," he said. "They spend less on research and development, they don't hire new workers, (and) they don't expand their markets."

"There is uncertainty that hits Italian businesses, and then you have the impact of uncertainty in other markets," he said. "A lot of Italy's industrial production, for example, makes machine parts for German companies. When the Germany industry faces uncertainty, that hits Italy as well."

The U.S.-China trade dispute is estimated to knock about 1 percent off Italy's GDP growth, whereas the Italian economy has been expected to see flat growth for the whole year, said Stefano Silvestri, a specialist in international relations and former president of Italian non-profit think tank Institute for Foreign Affairs.

"The impact could be a little more or a little less than 1 percent, but it is clear Italy already had its own economic problems, even before the trade war started," Silvestri said.

"When something like this comes along, all Italian companies can do is to muddle along and that is not what the economy needs," he said.