Trade war WARNING: Global economy would take ‘SIGNIFICANT hit’ if tensions escalate

Thursday, October 11, 2018
By Paul Martin

THE global economy “would take a significant hit” if the escalating trade war between the United States and China boils over, International Monetary Fund (IMF) Managing Director Christine Lagarde said today. While noting the financial sector is still growing, Ms Lagarde warned that the economy may still not be strong enough to handle rising trade tensions.

Thu, Oct 11, 2018

The IMF slashed its global growth predictions this week, and is now forecasting 3.7 percent global growth in both 2018 and 2019.

This is down from its July forecast of 3.9 percent growth for both years.

It had warned how the US and China was making the world a “poorer and more dangerous place” as the nations remain locked in a tit-for-tat trade conflict, slapping strings of tariffs on each other.

Speaking today at the IMF and World Bank annual meetings in Bali, Indonesia, Ms Lagarde said: ”The real question is: Is the economy strong enough?

“To that, my answer is ‘probably not enough’ because we clearly see growth has plateaued three years in a row — it is at 3.7 percent — and we also see that growth is unevenly allocated around the world.

She added: ”Moreover, some of the risks that we have highlighted at our spring meetings in April have now begun to materialise, especially from the rising trade barriers.

“If these tensions were to escalate, the global economy would take a significant hit.”

Ms Lagarde went on to suggest that countries who engage in trade and currency wars that hurt global growth would imperil “innocent bystanders”.

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