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Milton Ezrati is a partner, chief economist and market strategist at Lord Abbett & Co., LLC, a money management firm. He has been published in a wide variety of newspapers, magazines, and scholarly journals, including The New York Times, The Financial Times, The Asian Wall Street Journal, The Christian Science Monitor and Foreign Affairs on a broad spectrum of investment management topics.As if the world economy didn't have enough trouble, the collapse of global trade talks could dampen global growth for years to come. The gradual increase of trade is seen as one of the chief factors -- if not the largest factor -- behind growth since World War II. That is bound to mean grim news for future growth if the Doha Round of talks is not revived or other paths to trade liberalization are not pursued.
"This failure may just be one of many other setbacks encountered in the largely successful 60-year effort to reduce trade barriers around the world. But set against the growing sense of protectionism, in both the developed and the developing world, this failure carries an ominous tone," warns Milton Ezrati, the chief economist at the investment firm of Lord, Abbett & Co. "Investors, who already have plenty to worry about, will need to cut long-term growth expectations, unless renewed efforts to reduce trade barriers restart."
Poor countries will be especially hard hit because wealthy ones will not be opening markets to their goods, especially agricultural products. But that will have an effect on big wealth nations such as the U.S., too. Slower growth will slow or even halt the expansion of the middle class that has been the hallmark of so many developing nations. The middle class is, after all, a consumer class that buys goods from all over the world, everything from basic household goods to electronics such as cell phones and iPods to cars.
With consumers here and in other industrial countries already cutting back spending, that would be bad news indeed.
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