Global Economy to Witness a Major Reset, Emirates President Says

U.S. President Donald Trump’s trade battles and the accumulation of global debt to pre-financial crisis levels are among factors that will drive a major reset of the world economy in the next two to three years, according to the head of the world’s biggest long-haul airline.

“We have some extraordinary geopolitical forces at play,” Emirates President Tim Clark told attendees at an aviation event in the Indian Ocean nation of Mauritius. The industry could be facing a “mini” global financial crisis within two to three years and “there is going be a major reset,” he added.

The U.S. is set to impose tariffs on $200 billion of Chinese imports spanning bicycles and baseball gloves to digital cameras, two months after introducing a first round of levies. China has promised to respond in an ongoing tit-for-tat. The International Monetary Fund has warned that an escalating trade war could undermine the strongest global upswing in years.

There’s already intense competition in the Chinese market and declining passenger traffic from there to North America has prompted U.S. airlines to withdraw from some core routes to the world’s second biggest economy. Air China has complained that subsidies for its rivals is distorting the market and lowering fares beyond what’s economically viable. Carriers will have to learn how to deal with dumping by heavily subsidized state-owned carriers, Clark added.

Economies are still showing strong growth globally, Qantas Airways Ltd. Chief Executive Officer Alan Joyce said in an interview on Bloomberg TV, adding that it’s “going to take a lot to dampen those economies down.” “But having this trade war or the potential for a worldwide trade war I don’t think is good for any business, or good for confidence,” he said.