- Trade tensions could slow global economic growth to its weakest pace since the financial crisis a decade ago, the International Monetary Fund warned Tuesday.
- The international lender predicted global growth would register at 3% per cent for 2019, the lowest level since 2009.
- The report pointed to a series of tit-for-tat tariff disputes, including a bitter one between the Trump administration and China, as key risks to the growth outlook.
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Trade tensions could slow global economic growth to its weakest pace since the financial crisis a decade ago, the International Monetary Fund warned Tuesday.
In its latest World Economic Outlook report, the IMF predicted that global growth would register at 3% per cent for 2019. That would be the lowest level since 2009 and a 0.3-percentage-point downgrade from its last forecasts in April.
The international lender pointed to a series of tit-for-tat tariff disputes, including a bitter one between the Trump administration and China, as key risks to the growth outlook.
The costs and uncertainty associated with tariffs have stalled company investment and disrupted supply chains over the past year. The IMF estimated that by 2020, trade tensions between the US and China would reduce global growth by 0.8% or about $US700 billion.
“The weakness in growth is driven by a sharp deterioration in manufacturing activity and global trade, with higher tariffs and prolonged trade policy uncertainty damaging investment and demand for capital goods,” said Gita Gopinath, the IMF’s chief economist.
After months of concerns about the gloomy outlook for global trade, President Donald Trump announced preliminary progress with China last week and stalled a portion of planned escalations with the second largest economy. But the announcement was accompanied by no written text, and details were still scarce on Monday.
Steep tariffs also remain on thousands of products shipped between the US, China and other major trading partners. In the first half of the year, trade volume growth fell to its weakest level since 2012.
The gloomy forecasts came as leaders from the IMF and the World Bank headed into annual meetings in Washington.
“To rejuvenate growth, policymakers must undo the trade barriers put in place with durable agreements, rein in geopolitical tensions, and reduce domestic policy uncertainty,” Gopinath said. “Such actions can help boost confidence and reinvigorate investment, manufacturing, and trade.”
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