IMF revises down global growth forecasts on trade disputes

  • by Ahmed Mamdouh
  • October 9, 2018, 8:52 AM
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In its World Economic Outlook Report published twice a year, the International Monetary Fund slashed the global growth forecasts, citing trade disputes between the U.S. and its trading partners.

Now, the Fund predicts the world economy to expand 3.7 percent this year and next, down from previous forecasts of 3.9 percent growth, as it downgraded to the outlook for the United States, China and Europe.

"The impacts of trade policy and uncertainty are becoming evident at the macroeconomic level, while anecdotal evidence accumulates on the resulting harm to companies,” said Maurice Obstfeld, IMF chief economist.

Obstfeld has warned against the rising tide of protectionism, saying that without multilateralism “the world will be a poorer and more dangerous place.”

The IMF also cut its forecasts for global trade volume by 0.6 and 0.5 percentage points for this year and next, revealing that the trade conflict between the U.S. and its trading partners have started to hit global economic activity.

Asian shares hit 17-month low on Tuesday, where Japan’s Nikkei 225 index slumped 1.32 percent to close at 23,469.39.

European shares opened lower, as the Euro STOXX 600 dipped 0.06 percent to hover around 371.98.

Safe havens yen and gold, in addition to dollar, advanced but the Swiss franc failed to rise.

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