IMF sees stable global growth, wary over trade war

WASHINGTON: The International Monetary Fund (IMF) foresees strong, stable growth in the world economy but is warning that a souring political climate for trade could weaken one of the engines of global prosperity for years to come.

The IMF on Tuesday predicted global growth for both 2018 and 2019 at 3.9%, unchanged from the Washington-based crisis lender’s last quarterly update in January to the World Economic Outlook.

The 2018-19 growth forecast is the fastest since a 5.1% global rate in 2010, as the world briefly rebounded from the 2008 financial crisis.

“The world economy continues to show broad-based momentum,” IMF chief economist Maurice Obstfeld said.

“Against that positive backdrop, the prospect of a similarly broad-based conflict over trade presents a jarring picture.”

US President Donald Trump has repudiated Washington’s long-standing consensus in support of multilateral trade, withdrawing from the Trans-Pacific Partnership trade pact and threatening the North American Free Trade Agreement while forcing renegotiations with Mexico and Canada.

His announcement of tariffs on imported steel and aluminium unnerved global markets before temporary waivers were issued to the European Union, Canada, Mexico and South Korea, but not China or Japan. Trump has continually demanded that Beijing act to reduce its trade surplus with the United States.

China on Tuesday declared anti-dumping duties on US sorghum, on top of plans to slap tariffs on US$50 billion (RM194 billion) worth of US imports including soybeans.

“Let’s proceed in a collaborative way ... because that will ultimately be in everyone’s interests. There are not going to be any winners coming out of a trade war,” ” Obstfeld said

Meanwhile, advanced economies face slowing long-term growth potential from ageing populations, while many emerging and developing countries need to diversify to reduce dependence on commodity exports. Around the world, governments and the private sector remain debt-ridden, and risk a reckoning with key central banks raising interest rates. The IMF repeated its longstanding exhortation for governments to use the “window of opportunity” of current growth to plant the seeds for future prosperity. – dpa