In a new report on world economic outlook, the International Monetary Fund (IMF) has warned that escalation of Trump’s trade war with China and a no-deal Brexit could undermine global economic growth.
The IMF is now predicting the world economy to grow 3.5% in 2019, though it forecast the growth of 3.7% in October last year. As reported in BBC news, the global figure projects weaker growth than a year earlier.
For the UK, the report estimates the GDP to grow by 1.5% this year and 1.6% in 2020, however, it said that there is considerable uncertainty around that figure.
Tariff increases enacted by the US President in the nation and its counterpart in China have already been a major factor of the previous economic slowdown.
For China, the IMF expects the slowdown to continue, while growing by 6.2% this year and next.
The new assessment also includes revisions for the developed economies, particularly the European nations.
Unexpected developments have inflicted the economic damage, the report said, which in Germany followed the introduction of new fuel emissions standards, leading to disruptions to the motor industry in terms of sales and production.
In Italy, concerns are raised as the financial markets have been unstable by the government plans to expand spending, while economy slumped amid the battle with EU officials over the budget this year. According to the report, there are continued weaknesses in Italy’s banking system as well.
The UK’s economic outlook is particularly uncertain, the report said. The 2019 figure is unchanged but there appears to be small upward revision to the forecast for 2020. Earlier, the IMF had also warned that no-deal Brexit would involve significant costs to the Britain’s economy.
Rising trade tensions could spark a further deterioration to the global economy growth this year which have also been a recurrent topic in the latest IMF assessments. According to the organization, the main priority of shared policy is for nations to resolve quickly and co-operatively their trade disagreements and resulting policy uncertainty, instead of raising destructive barriers further and destabilizing an already plummeting world economy. It had already witness a downgrade in the October forecast due to impact of the tariff increases imposed by the US and China, the report added.
The IMF said that there are also risks from financial markets. Moreover, trade tensions and financial markets have intertwined in the most recent times which tightened the financial conditions, while increasing the risks to global growth.