US / China trade war and Brexit threaten global growth says IMF

The US trade war with China and Brexit uncertainty are hitting global economic growth forecasts for 2018 and 2019, according to the International Monetary Fund (IMF).

کد خبر: ۸۴۱۰۵۰

تاریخ: ۱۷ مهر ۱۳۹۷ - ۰۸:۱۳

At its annual meeting in Bali it downgraded its prediction to 3.7% from 3.9% in July.

In its report the IMF said the tit-for-tat tariffs imposed by the US and China, weaker performances by eurozone countries, Japan and Britain all conspired to increase pressure on the global economy, while "the possible failure of Brexit negotiations poses another risk".

It said the lack of progress in UK/EU discussions had created "pervasive uncertainty" about future trade costs.

"An intensification of trade tensions and the associated further rise in policy uncertainty could dent business and financial market sentiment, trigger financial market volatility, and slow investment and trade," the report said.

"An increase in trade barriers would disrupt global supply chains, which have become an integral part of production processes in the past decades, and slow the spread of new technologies, ultimately lowering global productivity and welfare.

"It would also make tradable consumer goods less affordable, harming low-income households disproportionately."

The IMF predicted UK growth to would be 1.4% in 2018, rising to 1.5% in 2019, while the eurozone 2018 growth forecast was cut to 2.0% from 2.2%.

Germany, the economic powerhouse of Europe, could be particularly hard hit by a drop in manufacturing orders and trade volumes.

The US growth forecast for 2019 is down from 2.7% to 2.5%.

China's growth is still expected to be more than 6% next year, but the IMF's chief economist Maurice Obstfeld warned Beijing to concentrate on quality and sustainability of growth, not quantity of growth.

"US growth will decline once parts of its fiscal stimulus go into reverse," Mr Obstfeld said in a statement.

"Notwithstanding the present demand momentum, we have downgraded our 2019 US growth forecast owing to the recently enacted tariffs on a wide range of imports from China and China's retaliation."