Oct 09, 2018 (LBO) – International Monetary Fund has reduced its outlook for global GDP growth by 0.2 percentage points to 3.7 percent for 2018 and 2019, according to the quarterly World Economic Outlook Report issued on Monday.
Rising trade tensions and debt levels in economies has prompted the International Monetary Fund to cut its forecast from the April 2018 WEO projection.
Global financial conditions are expected to tighten as monetary policy normalizes; the trade measures implemented since April will weigh on activity in 2019 and beyond.
The IMF said US fiscal policy will subtract momentum starting in 2020; and China will slow, reflecting weaker credit growth and rising trade barriers.
In advanced economies, marked slowdowns in working-age population growth and lackluster productivity advances will hold back gains in medium-term potential output.
Across emerging market and developing economies, medium-term prospects are mixed. Projections remain favorable for emerging Asia and emerging Europe, excluding Turkey, but are tepid for Latin America, the Middle East, and sub-Saharan Africa.
China and a number of Asian economies are also projected to experience somewhat weaker growth in 2019 in the aftermath of the recently announced trade measures.