Beijing: The International Monetary Fund (IMF) has cut its 2019 economic growth forecast for China to 6.2 per cent on heightened uncertainty around trade frictions, saying that more monetary policy easing would be warranted if the Sino-US trade war escalates. The downgrade came just two months after the IMF raised its forecast to 6.3 per cent from 6.2 per cent, partly on then-brightening prospects for a trade deal with the US.
A sudden escalation in the Sino-US trade tensions last month underlined the risks for the world’s second-biggest economy from higher US tariffs on billions of dollars of Chinese goods. Washington has levied higher tariffs on a total of $250 billion of Chinese imports since mid-2018, accusing China of forced technology transfers and intellectual property theft.
“Growth is expected to moderate to 6.2 per cent and 6 per cent in 2019 and 2020, respectively,” said the IMF’s Deputy Managing Director David Lipton in a statement. “The near-term outlook remains particularly uncertain given the potential for further escalation of trade tensions.”
Economists say the tariffs will curb growth in the US and China, and financial markets fret a protracted dispute could tip the world economy into a recession.