IMF global growth projection down for 2019 and 2020
The International Monetary Fund has reduced its growth projections for the global economy for 2019 and 2020 in a new report.
In April 2019, the yearly forecast was a predicted growth of 3.3 per cent over the course of the year, which has now been reduced to 3.2 per cent.
Global economic growth in 2020 is to increase to 3.5 per cent, yet falls below an earlier projection of 3.6 per cent.
The IMF says that growth is “subdued” amid global trade and technology tensions.
IMF chief economist, Gita Gopinath, told the BBC that the growth of the global economy is “sluggish and precarious” but warned that ultimately this stunted growth is “self-inflicted”.
The report indicates that the slowdown has been aggravated by US President Donald Trump’s hardline approach, after his administration increased tariffs on US-China trade in what has become a high-profile standoff.
The Trump administration has increased tariffs in retaliation to what it feels are unfair Chinese subsidies and the unjust acquisition of technology from American companies. In the report, the IMF has called for the uncertainty on trade agreements to be resolved as soon as possible.
The Fund has also singled out Brexit and the free-trade zone of the US, Mexico and Canada alongside the US-China dispute as issues that warrant a prompt resolution.
Despite such tension globally, the IMF has increased its growth forecast for the UK economy to 1.3 per cent from 1.2 per cent.
That projection reflects a strong opening quarter of the year for the UK amid Brexit-related stockpiling.
Assuming the UK undergoes an orderly Brexit, the IMF predicts growth of 1.4 per cent over 2020.
With “muted” inflation and minimal growth worldwide, the report says that low interest rate policies which have been implemented across the world should be the status quo. Indeed, Japan and the Eurozone have both seen at least one of their central banks reduce interest rates below zero, with the European Central Bank and US Federal Reserve also likely to reduce rates in the near future.
The Fund has also forecast a US economy slowdown, with 1.9 per cent growth forecast for 2020 following highs of 2.9 per cent in 2018. A halt is equally expected in China during the two-year period with the trade standoff still in place.