Since the U.S.-China trade war began more than a year ago, President Trump has maintained that billions of dollars in tariffs are hurting Beijing more than Washington – and on Tuesday, the president’s argument received some support from the International Monetary Fund.
In its update to the biannual World Economic Outlook, the Washington-based IMF upgraded its forecast of U.S. growth to 2.6 percent from 2.3 percent, while lowering its outlook for Chinese growth. It also noted that growth was “better than expected” in the U.S.
But in the country-by-country evaluation, the IMF said it expects the effect of tit-for-tat tariffs and weakening external demand to add pressure to China’s already-cooling economy. Growth is forecast at 6.2 percent in 2019, and 6.0 percent in 2020 – about 0.1 percentage point lower, compared to the IMF’s April outlook.
Overall, however, global growth is expected to remain relatively sluggish, thanks to lingering uncertainties including the U.S.-China trade war, the escalating technology tensions and mounting disinflationary pressures.
The Fund said it expects global growth to dip in the year ahead, forecasting 3.2 percent in 2019 and rising slightly to 3.5 percent next year. That’s 0.1 percentage point lower than the April projection.
“GDP releases so far this year, together with generally softening inflation, point to weaker-than-anticipated global activity,” the report said. “Investment and demand for consumer durables have been subdued across advanced and emerging market economies.”