LINGERING trade tension between the United States and China as well as geopolitical rivalry across the world is weighing on global economic growth, according to IMF’s latest assessment published in the World Economic Outlook, released at the start of the IMF/World Bank annual meetings, in Washington DC.
President Donald Trump’s weaponization of trade against China is affecting global growth prospects as the IMF has downgraded economic growth by 0.2 percent from its last forecast in April to 1.7 percent in 2019 and would remain there in 2020. Gita Gopinath, the IMF’s Chief Economist, specifically blamed contracting manufacturing especially automobile due to rising tariff and prolonged trade uncertainty on weak growth prospects. Thanks to these factors, she said trade volume declined to 1% in the first half of 2019. In contrast with trade, services, according to Gopinath, continue to hold up and this has buoyed labour market and wage growth.
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The uptick in growth projections in 2020 is anchored by emerging market and developing economies that are projected to experience growth rebound of 4.6 percent, according to the IMF. Emerging market economies that had experienced mild recessions such as Argentina, Iran, and Turkey are expected to see recoveries in 2020.
What to do to raise growth? Ms Gopinath says policymakers must undo trade barriers with durable agreements and reduce domestic policy uncertainty.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.