As the global economy faces its sharpest slowdown since the financial crisis, one industry is both culprit and victim. The motor industry affects the health of the global economy far more than its share of total output would suggest: carmakers have long supply chains to source parts; they are also big consumers of raw materials and chemicals, textiles and electronics; and their fortunes affect millions of service sector jobs in sales, repairs and maintenance. Last year the sector shrank for the first time since the global crisis. The IMF believes this fall in output accounted for more than a quarter of the slowdown in the global economy between 2017 and 2018.
The sector may also be responsible for up to a third of the slowdown in global trade growth between 2017 and2018, thefund said last month, after factoring in the spillover effects on trade in car parts and other intermediate goods.
“The car sector has been weighing heavily on manufacturing activity and growth,” Gian Maria Milesi-Ferretti, deputy director of the IMF’s research department, said last month. The IMF’s forecast of a modest pick-up in global trade in 2020 hinges on a recovery in the sector. But its analysis also underscored the potential for further damage if the sector becomes the next casualty of the escalating trade spat between the US and EU; the White House is due to decide by November 13 whether to impose a 25 per cent tariff on auto imports.