Washington: Escalating trade tensions are threatening to derail a global upswing that’s already losing momentum amid weaker-than-expected growth in Europe and Japan as financial markets seem complacent to the mounting risks, the International Monetary Fund (IMF) warned.
The IMF kept is global forecast unchanged Monday in the latest update to its Global Economic Outlook. The world economy will grow 3.9 per cent this year and next, said the Washington-based fund. The pace this year would be the fastest since 2011.
But cracks are forming in the growth picture. The global expansion is becoming less balanced, with growth sputtering in the Eurozone and Japan. Growth appears to have peaked in some major economies, and the boost from US tax cuts and spending increases is expected to fade, according to the IMF.
At the same time, downside risks to the global economy are growing, led by the threat of a further ratcheting up of trade tensions, the IMF said.
“The 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,” IMF chief economist Maurice Obstfeld said in prepared remarks.
