An upswing in economic risks due to rising trade tensions and debt levels has prompted the International Monetary Fund to cut its forecast for world growth for this year and next.
With trade growth set to slow sharply amid a trade war between the United States and China, the IMF cut its outlook for global GDP by two-tenths to 3.7 percent for 2018 and 2019, according to the quarterly World Economic Outlook Report issued Monday.
The revised estimates includes a worsening outlook for developing economies this year and next compared to the July report, as well as downgrades for the US and China in 2019.
The IMF warns that risks highlighted in previous reports “have become more pronounced or have partially materialized” in the real world.
The dominant US economy has been shielded from the ill effects so far due to the stimulus provided through tax cuts and spending policies but that will wear off by 2020.
Still, the trade disputes sparked by President Donald Trump that have led to tit-for-tat exchanges of tariffs among major trading partners are affecting China, other Asian economies and more vulnerable countries like Argentina and Turkey, along with Brazil.
Growth estimates for the euro area and Britain also was revised down.
The report warned that growth “may have peaked in some major economies.”