Global growth stumbles over customs barriers


>> IMF: the "absolute priority" is to resolve trade tensions
>> BM lowers global growth forecast

Gita Gopinath, chief economist of the IMF, on October 15 in Washington.

Photo: AFP / VNA / CVN

The International Monetary Fund announced on Tuesday (October 15th) that it expects for 2019 the weakest growth since the financial crisis, incriminating in the first place the trade war between the United States and China which begins hard the international trade and will amputate global GDP of 0.8%.The estimates were prepared before the announcement on Friday, October 18, of an agreement in principle between the two world's leading economies.

"We welcome all steps towards lowering tensions", reacted Mme Gopinath at a press conference.

If the agreement was actually signed, the impact on GDP would be reduced by 0.1 to 0.2 point, she added, while stressing that the decline in confidence, a side effect, would last Longer.

The persistence of geopolitical tensions, particularly in the Middle East, the difficult exit of the United Kingdom from the European Union (Brexit) and a manufacturing sector, in particular the automobile sector, at half-mast are the other main risks which led the Fund to lower, for the fifth time in a year, its global growth forecast.

"The global economy is experiencing a synchronized slowdown", commented Mme Gopinath echoing the words of the new Managing Director of the IMF, Kristalina Georgieva.

And while the recovery was driven by international trade after the 2008 crisis, the volume of goods and services traded will only increase by 1.1% this year, 1.4 percentage points less than expected. the IMF in the summer.

This is the smallest increase since 2012 and a fall from 3.6% in 2018.

Washington and Beijing, at the heart of a tariff war unprecedented since March 2018, will both record weaker growth than estimated in July.

The US expansion is expected to fall to 2.4% in 2019 according to the latest IMF forecast dated October 15th.

Photo: AFP / VNA / CVN

The US expansion should fall to 2.4% (a revision of -0.2 points from the July forecast) and that of China to 6.1% (-0.1 points)."Trade-related uncertainty has had negative effects on investment " in the United States, commented the IMF. "But employment and consumption remain robust, also supported by stimulus measures"he notes, which allows the world's first economy to pull, for the moment, its pin of the game.

"In China, the deterioration in growth reflects not only the rise in tariffs but also the slowdown in domestic demand as a result of measures taken to control debt"says the institution.

At the same time, eurozone countries are struggling with an expected growth of 1.2% (-0.1 points) in 2019.

In Italy, GDP will even stagnate, in Germany it will grow by only 0.5% (-0.2 points) and 1.2% in France (-0.1 points).

"In general, the weakness of exports has slowed the activity of the euro zone since the beginning of 2018"summarized the IMF, which also notes the persistence of the impact of changing pollutant standards in the automotive sector.


Elsewhere in the world, the growth of some major economies in 2019 will be much lower than 2018 but also what was expected in July. This is the case in India (-0.9 points compared to previous forecasts at 6.1%), Mexico (-0.5 points to 0.4%) or Russia (-0.1 point at 1.1%).

South Africa (unchanged at 0.7%) and Brazil (+0.1 point at 0.9%) are doing slightly better, but with very low growth rates for emerging economies.

The situation of these countries is expected to recover in 2020.

Looking to the future, the IMF anticipates a rebound in global growth in 2020 to 3.4% (-0.1 points).

"However, unlike the slowdown that is synchronized, this recovery is not general and remains precarious"Gita Gopinath warned, noting that the slowdown will continue in the United States, Japan and China.

Overall, all countries face headwinds. Some of them, like the United States, have been able to compensate for this by lowering interest rates.

However, warns the IMF, "monetary policy can not be the only tool"to stimulate growth.

And the first signs of a slowdown in the service sector in both the United States and the euro zone are visible.

The Fund recommends, for example, Germany to benefit "negative borrowing rates for investing in social capital and infrastructure ".

"Political mistakes at this stage, such as a Brexit without agreement or an escalation of trade disputes, could seriously undermine confidence, growth and job creation "insists the IMF, also warning against the volatility of the financial markets.

Finally, the IMF urges to tackle now the risks of climate change, which "will increase significantly in the future".


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