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The U.S.-China trade war has reversed the world’s growth story in 2 years – Axios

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  • It was the third time this year the organization has cut its growth projections and the fourth time since 2018, when the Fund anticipated 3.9% growth this year.

What we’re hearing: “With uncertainty about prospects for several of these countries, a projected slowdown in China and the United States, and prominent downside risks, a much more subdued pace of global activity could well materialize,” IMF chief economist Gita Gopinath said at a press conference announcing the Fund’s World Economic Outlook and revised projections.

The big picture: The biggest factor weighing on global growth is the U.S.-China trade war launched by President Trump in April 2018, which Gopinath and the IMF expect will cost the world 0.8% in GDP losses this year.

  • Even its latest watered-down growth predictions are optimistic and rely on some against-the-grain expectations: that Brexit will be resolved in an orderly fashion, the U.S.-China trade war will wind down and other geopolitical conflicts will cool.

Watch this space: The 3% number is particularly important because Gopinath projects that if growth were to slow to 2.5%, “that’s a scenario where several countries are in recession.”

Threat level: The global economy already is in “a synchronized slowdown,” IMF managing director Kristalina Georgieva said at a recent news conference.

The bottom line: To keep the global economy from falling into a recession, “policymakers must undo the trade barriers put in place with durable agreements, rein in geopolitical tensions, and reduce domestic policy uncertainty,” Gopinath said.

  • There are few who expect that to happen.

Go deeper: A synchronized global slowdown



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Thanks !

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