The International Monetary Fund (IMF) has revised downward its predictions for global economic growth. President Trump’s trade polices are “central to the IMF’s concerns about global growth”, according to The Hill, concerns which led the IMF to decrease its predictions for worldwide economic growth. The IMF also has other concerns that could contribute to the slowdown of growth, but Trump’s trade policies are, as noted, central to their concerns. In its economic forecast the IMF yesterday reduced its projections for economic growth for 2018-2019 by 0.2 percentage points of gross domestic product (GDP) and further expressed concerns about the damage Trump’s trade policies have done to international relationships with the United States, making it more difficult for the U.S. to get out of the trade wars Trump has started, further aggravating the problem. According to The Hill:
The International Monetary Fund (IMF) on Monday said the global economy would grow at a slower pace than the group had projected due to rising trade tensions between the U.S and major world powers. …The Trump administration’s trade policy is central to the IMF’s concerns about global growth. It’s unclear whether the revamped North American Free Trade Agreement (NAFTA) will pass Congress. The U.S. and China are nowhere close to resolving their deepening feud over tariffs and other trade barriers. President Trump has also threatened to impose tariffs on foreign autos, which could derail the economies of several U.S. allies and raise car prices. (IMF research director Maurice) Obstfeld said that the trade conflicts have damaged the global economy beyond just the harm to specific industries and businesses in the crosshairs of tariffs. He also said that fraying international policy cooperation would make it harder for the U.S. to find a successful way out of its trade wars. The IMF projects U.S. growth to taper through 2019 due to higher costs driven by tariffs and the phase out of stimulus driven by the 2017 tax-cut bill.
The International Monetary Fund releases economic forecasts in April and October of each year. The April projection of 3.9% global economic growth was downgraded to 3.7% in the newly released October report, with the IMF finding that growth has already stagnated at that point. IMF research director Maurice Obstfeld also cited the deteriorating relationship between the U.S. and China as worrisome regarding economic growth and stated, according to The Hill, that “The likelihood of further negative shocks to our growth forecast has risen. These concerns raise the urgency for policymakers to act.”
This international downgrading of projected economic growth fits with downgraded projections for the United States on its own. In August the Congressional Budget Office (CBO) also released downturns in its economic growth projections for the U.S.