US-China trade war weighing on world's growth, IMF says
Thursday, 17 October 2019 The global economy is slowing, largely because of the U.S. trade war with China, according to the 189-member International Monetary Fund.
The Washington-based institution is the world's lender of last resort, providing emergency loans when countries face financial crisis. In its latest forecast the IMF blamed higher tariffs as a key driver of this year's slowdown in global economic growth.
Growing uncertainty over trade and rising geopolitical tensions also underlie the IMF's new forecast for global economic growth to slow to 3% this year. That would be the weakest performance since 2009, when the global economy contracted 0.1% in the aftermath of the 2008 financial crisis.
The IMF predicts U.S. growth will slow to 2.4% this year from 2.9% in 2018. It also forecasts an increase of only 2.1% next year, even as it expects global economic growth to rebound 3.4% in 2020.
The trade war between the U.S. and China has dragged on for 15 months. Along the way, the two sides have raised import duties on billions of dollars of each other's goods and threatened to pile on more later this year.
Uncertainty over when the conflict might be resolved has roiled financial markets and fueled fears that the dispute might tip the global economy into recession.
Tensions seemed to ease Oct. 11, when a new round of trade negotiations saw the U.S. agree to suspend a planned hike in tariffs on $250 billion of Chinese goods that had been set to kick on Oct. 15. In exchange, Beijing agreed to buy $40 billion to $50 billion in U.S. farm products.
Despite that, some investors remain skeptical.
"Really nothing came out of those talks of consequence," said Adam Taback, deputy chief investment officer at Wells Fargo Private Bank. "The best outcome that we got was a lack of further escalation, for...
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