The International Monetary Fund on Tuesday cut its forecast for global growth th...
WASHINGTON/SANTIAGO - The International Monetary Fund on Tuesday cut its forecast for global growth this year and next, warning that further U.S.-China tariffs or a disorderly exit for Britain from the European union could further slow growth, weaken investment and disrupt supply chains.
The IMF slashed its forecast for growth in global trade by 0.9 percentage point to 2.5% in 2019. Trade should rebound and grow by 3.7% in 2020, about 0.2 percentage point less than previously forecast. “A major downside risk to the outlook remains an escalation of trade and technology tensions that can significantly disrupt global supply chains,” she said, repeating the IMF’s estimate that tariffs imposed in 2018 and new tariffs threatened in May could reduce total world economic output by 0.5% in 2020.
Gian Maria Milesi-Ferretti, deputy director of the IMF’s research department, told Reuters that a move by Washington to slap tariffs on the remaining $300 billion of its Chinese imports, would be “very costly” for both countries, as well as affect supply chains throughout Asia.The United States could offset the impact of cost increases by turning to alternative sources for a limited set of imports, he said.
The IMF said growth was better than expected in advanced economies like the United States, and one-off factors that had throttled growth in the euro zone were fading, as anticipated.
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