Posted Date: 11/10/2018
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The trade policy adopted by the United States is the main threat to the world economic outlook

The trade policy adopted by the United States is the main threat to the world economic outlook

US trade policy

On October 9, the International Monetary Fund (IMF) released the latest issue of the World Economic Outlook report. It is estimated that the world economy will grow at a rate of 3.7% this year and next, down from 3.9% predicted in July this year. The IMF warned that escalating trade tensions are the main cause of world economic growth. All economies should work together to defend the rules-based multilateral trading system, alleviate and finally resolve current trade disputes in order to maintain world economic growth.

The momentum of world economic expansion has become less clear

The IMF said in the report that the world economic growth rate is 3.7% this year and next, which is the same as the growth level in 2017, and the world economic growth has entered the “flat period”. The IMF pointed out that in the past few months, some economic downside risks have emerged, including the increase in trade barriers and the reversal of capital inflows in emerging economies with weak fundamentals. The world economic outlook has become less balanced and the expansion momentum has become less clear.

The IMF will maintain the US economy forecast of 2.9% in 2018, but the growth rate in 2019 will be lowered from 2.7% to 2.5%. The report pointed out that the reason for lowering the US 2019 growth forecast is due to the recent US tariff increase measures. In addition, the United States will begin to cancel fiscal stimulus in 2020, the monetary tightening cycle is expected to peak, and economic growth will begin to decline.

The IMF also lowered its growth forecast for the euro zone, Japan and the UK. It is expected that due to the US tariff increase measures, Germany's annual growth rate will not exceed 1.9% in the next two years, and France's annual growth rate is 1.6%, which is also the main country in the euro zone facing the decline in growth rate. The growth rate of emerging markets and developing economies in the next two years is expected to be 4.7%, down 0.2 and 0.4 percentage points respectively.

The report believes that the long-term growth of developed economies is on a downward trend. The long-term challenges faced by many developed economies may focus on the slow growth of workers' income, the decline of social mobility, and the inadequate response of some countries to structural economic changes, leading to further deterioration of public sentiment, which in turn exacerbates current Trade tensions.

The trade policy adopted by the United States is the main threat to the world economic outlook


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