IMF cuts growth forecast to slowest pace since financial crisis
WASHINGTON: The US-China trade war will cut this year's global growth to its slowest pace since the 2008-2009 financial crisis, the International Monetary Fund (IMF) warned yesterday, adding that the outlook could darken considerably if trade tensions remain unresolved.
The IMF said its latest World Economic Outlook projections show 2019 gross domestic product growth at 3 per cent, down from 3.2 per cent in a July forecast.
The forecasts set a gloomy backdrop for the IMF and World Bank annual meetings this week in Washington, where the fund's new managing director, Ms Kristalina Georgieva, is inheriting a range of problems.
The World Economic Outlook report spells out the economic difficulties caused by the US-China tariffs, including direct costs, market turmoil, reduced investment and lower productivity due to supply chain disruptions.
The global crisis lender said that by next year, announced tariffs would reduce global economic output by 0.8 per cent.
Ms Georgieva said last week that this translates to a loss of US$700 billion (S$960 billion), or the equivalent of making Switzerland's economy disappear.
"The weakness in growth is driven by a sharp deterioration in manufacturing activity and global trade, with higher tariffs and prolonged trade policy uncertainty damaging investment and demand for capital goods," IMF chief economist Gita Gopinath said. - REUTERS