China Trade War to Hurt Global Economic Growth

12 Octubre, 2018, 08:04 | Author: Arnold Perez
  • Finance Minister Asad Umar says decision is taken after consulting leading economists

Ahead of the Bali gathering, the International Monetary Fund reviewed its global growth forecast down 0.2 percent to 3.7 percent for 2018 and 2019 - citing trade tensions, protectionism and rising debt levels as the main causes.

IMF's forecast for Singapore's economic outlook remains steady at 2.9% for 2018, but has been revised downward by 0.2 percentage points to 2.5% for the following year.

The rapid build-up in debt in China in recent years also is a concern, although Chinese authorities have taken steps to rein in debt growth, he said.

U.S. growth this year remained steady at 2.9 percent but is set to slow in 2019 as the effect of Trump's sweeping tax cuts wear off and the trade dispute with China begins to set in.

U.S. Treasury Secretary Steven Mnuchin is expected to meet with worldwide finance officials in Indonesia this week during IMF and World Bank summits, though as of Monday he had no meetings scheduled with Chinese officials - as reported by Reuters.

And it stressed "cooperative solutions" to help boost continued growth in trade "remain essential to preserve and extend the global expansion".

The United States and China - the world's two biggest economies - are sparring over Beijing's aggressive effort to challenge American technological dominance.

Thor Equities CEO Joe Sitt on the increasing US trade tensions with China.

The possible failure of Brexit negotiations also dampened the eurozone's growth outlook.

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The Fund says the global economy's growth target has dropped by 2 percent from the initial 3.9 percent.

The IMF projected that the nation's economy will grow from 1.9 percent in 2018 to 2.3 percent in 2019 adding that Nigeria, South Africa and Angola's slow growth economies are slowing the rest of Africa.

The fund urged governments to focus on policies that can share the benefits of growth more widely, helping counter the growing mistrust of institutions, and to avoid "protectionist reactions to structural change".

The report said trade tensions and the associated rise in policy uncertainty "could dent business and financial market sentiment, trigger financial market volatility, and slow investment and trade". "This is the United States trying stop China's growth - it's a awful idea", Sachs, director of the Center for Sustainable Development at Columbia University, told a seminar in Bali.

Short-term risks to global financial stability have increased "modestly", the Washington-based lender said.

United States stimulus also adds to the "already-unsustainable" debt and deficit that will undercut future growth, the report warned.

"China and a number of Asian economies are also projected to experience somewhat weaker growth in 2019 in the aftermath of the recently announced trade measures", it said.

Compared to the medium-term risks, near-term risks have risen in the past six months but are "relatively limited" and subdued, relative to historical norms, with financial conditions still broadly accommodative and supportive of growth in the near-term, said the International Monetary Fund.

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