International Monetary Fund says global economy will slow after 2019 on escalating trade tensions

International Monetary Fund says global economy will slow after 2019 on escalating trade tensions

International Monetary Fund says global economy will slow after 2019 on escalating trade tensions

It also upgraded its forecast for United States growth in 2018 to 2.9%, up from 2.7% previously.

Growth for 2019 remains confirmed at 1.1%.

Back in 2015 the economy was reported as growing by 26 per cent, leading some to claim it was a case of "leprechaun economics", as the sharp growth rate was largely down to the onshoring of IP by firms such as Apple.

The IMF kept its 2018 and 2019 global growth forecasts unchanged at 3.9 percent for both years after upgrades in January.

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However, in the back-drop of prospects a trade-war between United States and China, the International Monetary Fund said that such a development threatens to undermine confidence and derail global growth prematurely.

The global financial watchdog also said the Bank of England needs to raise interest rates to stave off inflation because the economy is running at its speed limit, even at the present depressed levels. The...

In the case of the U.S., the noted that the sweeping USA tax cuts was expected to fuel higher growth only through next year, and after that would "subtract momentum".

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"The growth rate in China is projected to soften down during this period", it said, adding that over the medium term, its economy is projected to continue re-balancing away from investment toward private consumption and from industry to services, but nonfinancial debt is expected to continue rising as a share of GDP, and the accumulation of vulnerabilities clouds the medium-term outlook.

However, the International Monetary Fund warns future growth prospects look challenging for advanced economies faced with ageing populations and low productivity growth, making it hard for household income growth to return to their pre-GFC pace.

"The prospect of trade restrictions and counter-restrictions threatens to undermine confidence and derail global growth prematurely", Obstfeld said at a press conference Tuesday.

Last month, the Trump administration imposed steep tariffs on global steel and aluminum exports to the USA and threatened China with about $100 billion in additional tariffs.

The IMF also highlighted some risks for the Turkish economy.

The IMF said the reforms would improve infrastructure in transport and telecommunication sectors to spur growth. That's in line with its most recent estimate in January.

But for the next few decades, the risks to the global growth forecasts were broadly balanced, it added, with the potential for stronger business profits to increase hiring and investments that could boost productivity.

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