IMF’s World Economic Outlook (WEO) report has warned that Trumps trade war could cost $430bn to the world, with America “especially vulnerable”.
As expected, all economies would suffer from the increased tarrifs, the US could be at the front “as the focus of global retaliation” with a relatively higher share of its exports taxed in global markets. “It is therefore especially vulnerable,” the fund said.
According to The Guardian, “Delivering a sharp rebuke for Donald Trump, the Washington-based organisation said the current threats made by the US and its trading partners risked lowering global growth by as much as 0.5% by 2020, or about $430bn in lost GDP worldwide.”
“Trump raised the stakes in his mounting trade dispute with China last week by proposing 10% tariffs on $200bn of Chinese goods entering the country, on top of $34bn of tariffs that were officially imposed on Beijing at the beginning of the month. The Chinese government, which hit back at the first wave of US tariffs with similar measures, was quick to warn of further retaliation on Monday.”, reported The Guardian.
Maurice Obstfeld, the IMF’s economic counsellor, said that improvement in the world economy, which started about two years ago has flattened, and “Countries must resist inward-looking thinking and remember that on a range of problems of common interest, multilateral cooperation is vital.”
IMF said China would continue to grow but at a slower rates compared to it’s forecast in April, but the US faces greater risks from trade war.
“Growth in the UK this year is forecast to slow to 1.4%, compared with an estimate of 1.6% made in April… Germany, France and Italy were among European nations receiving the sharpest downgrades for growth this year, of as much as 0.3% compared with forecasts made in April, amid rising political risks in the single currency area triggered by the Italian election earlier this year. Growth across the eurozone this year is forecast to slow to 2.2%, compared with an earlier forecast for an expansion of 2.4%.”, reported The Guardian.
