France, Germany and Italy will have the biggest economic slowdowns - International Monetary Fund warns

Lloyd Doyle
July 17, 2018

The IMG noted that the United States had initiated trade actions affecting a broad group of countries, and faced retaliation or retaliatory threats from China, the European Union, its NAFTA partners, and Japan, among others.

"Our modelling suggests that if current trade policy threats are realised and business confidence falls as a result, global output could be about 0.5% below current projections by 2020", International Monetary Fund chief economist Maury Obstfeld said in a statement.

"The risk that current trade tensions escalate further with adverse effects on confidence, asset prices and investment is the greatest near-term risk to global growth", IMF Chief Economist Maury Obstfeld told a news conference, noting that USA trade deficits are likely to grow due to high demand, possibly inflaming trade tensions further.

The reduction in output takes into account active USA global tariffs on steel and aluminum, as well as an initial $34 billion in Chinese goods, along with retaliatory measures.

Other threatened actions, which include fresh tariffs on a further $200 billion in Chinese goods and a 25 percent global tariff on vehicle imports, are also included.

For the region, growth is expected to increase from 2.8 percent in 2017 to 3.4 percent this year, rising further to 3.8 percent in 2019 (0.1 percentage point higher for 2019 than forecast in the April WEO).

The IMF also noted that China continued to grow in line with its earlier projections.

On Saturday, Economic Affairs Secretary Subhash Chandra Garg had said, "Eight per cent growth is very much achievable". Nigeria's growth is set to increase from 0.8% in 2017 to 2.1% in 2018 and 2.3% in 2019 on the back of an improved outlook for oil prices. Growth in China is projected to moderate from 6.9% in 2017 to 6.6% in 2018 and 6.4% in 2019, as regulatory tightening of the financial sector takes hold and external demand softens, the report said.

The euro zone's 2018 growth forecast was cut to 2.2% from 2.4%, with Britain cut to 1.4% from 1.6%.

Obstfeld said that although some factors have negatively impacted the global growth since April, they were not significant enough to reduce the projection.

The IMF also trimmed 2018 forecasts for some emerging market countries, notably a half percentage point cut for Brazil to 1.8% due to the lingering effects of labour strikes and political uncertainty.

The International Monetary Fund (IMF) on Monday said the Indian economy will grow slower than what it had estimated just three months ago because of higher crude oil prices and speedier interest rate hikes.

The IMF revised slightly upward 2018 forecasts for Saudi Arabia and several Commonwealth of Independent States countries other than Russian Federation.

Other reports by Iphone Fresh

Discuss This Article