The International Monetary Fund sees global growth falling to the lowest level since the financial crisis, pulled down by slowing international trade.
The IMF said Tuesday that it expects growth to slow to 3 percent this year, down from its July estimate of 3.1 percent.
The IMF described the situation as a “synchronized slowdown,” meaning economies all around the world are slowing together. It forecast for the U.S. economy dropped by two-tenths of a percentage point to 2.4 percent annual growth in 2019. China’s forecast was lowered one-tenth of a percentage point to 6.1 percent. Japan was left unchanged at the already low level of 0.9 percent growth. Europe was cut one-tenth of a percentage point to 1.2 percent.
“Growth continues to be weakened by rising trade barriers and increasing geopolitical tensions,” said Gita Gopinath, the IMF’s chief economist.”We estimate that the US-China trade tensions will cumulatively reduce the level of global GDP by 0.8 percent by 2020.”
The IMF said it projects “a modest improvement” in global growth to 3.4 percent in 2020, faster growth than it expects this year but two-tenths of a percentage point below its April forecast for 2020. Also, the IMF notes that the 2020 “recovery is not broad-based and remains precarious.”
In particular, the IMF expects the U.S. economy to slow even further next year
The IMF places the blame for growth squarely on trade tensions, including the U.S.-China trade fight and Brexit. It now forecasts that world trade volumes will expand by just 1.1 percent this year, a huge downgrade from it’s July estimate of 2.5 percent growth.