IMF warns of trade tensions in global outlook downgrade

With uncertainty on the horizon, the IMF has downgraded its outlook for the world's economic output. It warned that US tariffs on European cars, a no-deal Brexit or a trade war with China could tank the global economy.

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The US has serious reservations over global lenders like the IMF providing a bailout to Pakistan to pay off Chinese debts. (Reuters)

With uncertainty on the horizon, the IMF has downgraded its outlook for the global economy. The International Monetary Fund (IMF) on Tuesday downgraded its global growth outlook, citing trade tensions between the two largest economies. The organization said it expects the world economy to expand by a “sluggish” 3.2% in 2019 after it expanded by 3.6% in 2018.

“The projected growth pickup in 2020 is precarious,” the IMF said, noting that that an ongoing trade conflict between the US and China has dragged down growth for the global economy.

For China, the “negative effects of escalating tariffs and weakening external demand have added pressure” on its economy. The US, which received a modest boost in the outlook, is on track to slow from 2.9% GDP growth in 2018 to 2.6% in 2019.

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The IMF urged countries to take steps to resolve trade disputes and strengthen systems for international trade.

EU in the crosshairs

The organization also identified US tariffs on European products, including threatened tariffs on cars, as having a destabilizing effect. Last year, Washington slapped tariffs on European steel and aluminum, triggering retaliatory tariffs on some American products exported to the EU.

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