IMF released the July update of the World Economic Outlook. Chief Economist Maury Obstfeld said in the the group continued to project global growth of around 3.9% for 2018 and 2019. But “risk of worse outcomes has increased, even for the near term.” In particular, he noted that “risk that current trade tensions escalate further—with adverse effects on confidence, asset prices, and investment—is the greatest near-term threat to global growth.”
He added that the US has ” initiated trade actions affecting a broad group of countries” and “faces retaliation or retaliatory threats from China, the European Union, its NAFTA partners, and Japan, among others.” Based on their modeling, Obstfeld said the trade policy threats could lower global output by around 0.5% by 2020. The US is “especially” vulnerable as it’s the “focus of global retaliation”.
Below are the new projections, compared with April’s.
Full release and WEO update.
