WASHINGTON: Tariffs imposed or threatened by the United States and China could shave 0.8 per cent off global economic output in 2020 and trigger more losses in future years, the International Monetary Fund said.
IMF spokesman Gerry Rice said trade tensions were beginning to affect a world economy already facing challenges including a weakening of manufacturing activity not seen since the global financial crisis of 2007-2008.
US Treasury Secretary Steven Mnuchin told Reuters he had not seen the new IMF forecast, but did not expect the impact to be as significant in the United States.
“I don’t see it in US as that big an impact,” he said, when asked about the IMF forecast after an event hosted by the New York Times.
Rice told a regularly scheduled IMF news conference that the global lender is to release a new revised economic outlook next month, but provided no details.
World economic activity remained subdued, with trade and geopolitical tensions causing uncertainty and eroding business confidence, investment and trade, he said. The IMF had previously forecast that the US-China trade war and other trade disputes threatened future global growth, but Rice said the impact was now being felt.
“Trade tensions... are not only a threat, but are actually beginning to weigh down the dynamism in the global economy,” he said, adding US-China tariffs “could potentially reduce the level of global GDP by 0.8 per cent in 2020, with additional losses in future years’’.
That forecast is more gloomy than one earlier this year, when the IMF said tariffs already imposed and those planned could shave 0.5 per cent off global economic output in 2020.
Mark Hamrick, economic analyst at Bankrate, a New York-based consumer financial services company, said the new forecast reflected scepticism that Washington and Beijing would end the trade war. — Reuters
Oman Observer is now on the WhatsApp channel. Click here
