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Sunday, June 16, 2024

IMF downgrades world growth

Global trade tensions, continued uncertainty and rising prospects for a no-deal Brexit are sapping the strength of the world economy, which faces a “precarious” 2020, the International Monetary Fund warned.

Trade conflicts are undercutting investment and weakening manufacturing, and the IMF urged countries to avoid using tariffs to resolve their differences.

In its quarterly update of its World Economic Outlook the IMF trimmed the global forecast issued in April by 0.1 percentage point this year and next, with growth expected to hit 3.2 percent in 2019 and 3.5 percent in 2020.

But the report sounded the alarm, saying things could easily go wrong.

“Global growth is sluggish and precarious, but it does not have to be this way because some of this is self-inflicted,” IMF chief economist Gita Gopinath told reporters.

“Dynamism in the global economy is being weighed down by prolonged policy uncertainty as trade tensions remain heightened despite the recent US-China trade truce … and the prospects of a no-deal Brexit have increased,” she said at a briefing in Santiago, Chile.

Gopinath warned that the recovery seen next year “is precarious” because “close to 70 percent of the increase relies on an improvement in the growth performance in stressed emerging market and developing economies and is therefore subject to high uncertainty.”

However, the United States, which is at the center of most of the trade tensions, saw one of the rare upgrades in the report, as it got a short-term boost from strong economic growth in the early part of the year.

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