The U.S.-China trade war will cut 2019 global growth to its slowest pace since t...
WASHINGTON - The U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis, the International Monetary Fund warned on Tuesday, but said output would rebound if their dueling tariffs were removed.
Without a nearly simultaneous easing of monetary policy by major central banks, IMF chief economist Gita Gopinath said global growth would be half a percentage point lower in 2019 — at 2.5%, teetering on the edge of widespread recession. The growth downgrade assumes that all announced U.S. tariffs on Chinese goods are put in place, along with Chinese retaliation. These include a 5 percentage point U.S. duty increase on Chinese goods originally scheduled for Tuesday and 10% tariffs on $156 billion in Chinese goods scheduled for Dec. 15.
For 2020, the Fund said global growth was set to pick up to 3.4% due to expectations of better performances in Brazil, Mexico, Russia, Saudi Arabia and Turkey. But this forecast was a tenth of a point lower than in July and was vulnerable to downside risks, including worse trade tensions, Brexit-related disruptions and an abrupt aversion to risk in financial markets.
The institution said the decline of some $1.5 trillion between 2017 and 2018 reflected purely financial operations by large multinational corporations, including in response to changes in U.S. tax law. After expanding by 3.6% in 2018, the IMF now projects global trade volume will increase just 1.1% in 2019, 1.4 percentage points less than it forecast in July and 2.3 percentage points less than forecast in April.
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