A stark warning was aimed by the International Monetary Fund (IMF) to Donald Trump, the President of the United States of America. It says that a global trade war that was launched by the United States has the possibility to result in a $440 billion (£330 billion) blow to the global economy.
Today, the influential body predicted that global growth will come in at 3.9 percent this year and in the coming year. However, it warned that an intensification in the international trade disputes could knock 0.5 percent off growth projections by 2020 – equivalent to a lost growth of approximately $440 billion globally per year.
The director of the research department of the IMF, Maury Obstfeld, said that a trade war is the “greatest near-term threat to global growth” with the United States “especially vulnerable” to the tariffs on exports that were imposed as retaliatory tariffs.
The White House has started imposing a series of tariffs which it expects will help ing reducing the trade deficits that it runs with nations including Germany and China in an attempt to improve domestic industry. However, some economists have been nearly unanimous in their warnings that the tariffs will harm the growth in the United States, taking a serious toll on wealth and job numbers.
The IMF also decreased its growth projection for the United Kingdom for this year to reflect the weakness that was observed in the first quarter, when the economy improved by only 0.2 percent. The forecasts show that the GDP of the United Kingdom will expand by 1.4 this year and 1.5 percent in 2019.
The IMF said that the process of Brexit which is still “unsettled despite months of negotiation” is considered to be one of the fundamental risks to the outlook which has already become “more prominent” since the most recent update that was made last April.
Obstfeld said that financial markets are said to be “broadly complacent” regarding the threats to growth, with debt costs remaining low and assets still richly valued.
Obstfeld stated: “Asset prices are no doubt buoyed, not only by easy financial conditions but by the generally still satisfactory global growth picture. They therefore are susceptible to sudden re-pricing if growth and expected corporate profits stall.”
He condemned “non-inclusive growth and structural transformation” for the “political malaise” that is represented by the protectionism of Trump. He said that “the political future will only darken” if the policies do not address the looming issues of equity.