Trade rows, high debt cloud global growth

> Economy to expand at 3.7% this year year and next, IMF survey shows

NUSA DUA: Trade disputes over import tariffs introduced by the United States and high debt in countries around the world have put the brakes on economic growth worldwide, the International Monetary Fund (IMF) said yesterday.

Releasing its latest survey of the world economy, the IMF said that growth this year would remain steady at 3.7%, and stay at the same level next year. This downgrades its forecast issued in April of 3.9%.

“That number now appears overoptimistic,” said the organisation’s chief economist Maury Obstfeld. “Rather than rising, growth has plateaued at 3.7%. There are clouds on the horizon,” he said at a press conference marking the release of the closely-watched report.

The economic growth for the world’s top two economies, the United States and China, was also downgraded by the IMF.

Obstfeld mentioned the lack of legislative approval for trade deals between the US, Mexico and Canada, as well as the departure of Britain from the European Union as key areas of uncertainty.

“US tariffs on China and, more broadly, on auto and auto part imports may disrupt established supply chains, especially if met by retaliation,” he added.

“Growth is being supported by policies that seem unsustainable over the longer term,” he said. “These concerns raise the urgency for policymakers to act.”

When it came to debt, Obstfeld said that “the high levels of corporate and sovereign debt built up over years of easy global financial conditions ... constitute a potential fault line.”

Emerging economies would be hit harder by the slowdown than what the IMF referred to as advanced economies, for example in Europe and the US. – dpa