Trade battles have put the global economy in a precarious position, according to the International Monetary Fund.
Its reduced forecasts for almost all major economies.
And its call for coordinated action in the event things worsen may be difficult in the current political climate, as CGTN’s Owen Fairclough reports.
The warning from the International Monetary Fund’s Chief Economist was stark.
“The global economy is in a synchronized slow down and we are once again downgrading growth for 2019 to 3% – its slowest pace since the global financial crisis,” Gita Gopinath told a news conference after unveiling the IMF’s latest forecast.
A year ago the IMF was touting what it called steady growth. But trade wars waged by the Trump administration with partners such as China have taken their toll—and backfired on the U.S.
The IMF sees U.S. economic output falling by half a percent next year, while China’s would fall 2 %, though some economists think China’s prospects are better due to financial reforms.
“Policymakers must undo the trade barriers put in place with durable agreements, rein in in geopolitical tensions and reduce domestic policy uncertainty,” Gopinath added.
Those trade barriers may start to fall after the U.S. and China last week verbally agreed to a partial deal to resolve their trade battle.
For the IMF, this would improve growth prospects everywhere.
But if conditions worsen, the IMF said a coordinated global response would be needed—the kind of stimulus agreed upon following the financial crisis of 2008.
And yet the Trump administration’s ‘America first’ strategy is being copied by other populist leaders, who are less interested in consensus than their predecessors.