IMF cuts global growth to 3.2% in 2019, 3.5% in 2020

The International Monetary Fund (IMF) on Tuesday cut the global forecast by 0.1 percentage points for this year and next, with growth expected to hit 3.2 percent in 2019 and 3.5 percent in 2020, according to the quarterly update of its World Economic Outlook (WEO).

[File Photo: IC]

The revision is mainly attributed to combined factors of ongoing trade tariffs and Brexit uncertainties that have weakened investment and disrupted the supply chain, the IMF said.

Global growth sluggish and precarious

"The projected growth pickup in 2020 is precarious" and presumes there will be "stabilization in currently stressed emerging market and developing economies and progress toward resolving trade policy differences, the IMF said.

For advanced economies, the IMF predicts 1.9 percent growth in 2019 and 1.7 percent in 2020.

The IMF put U.S. GDP growth at 2.6 percent, 0.3 percentage points higher than in the April WEO. However, the growth is expected to slip to 1.9 percent in 2020. These developments point to a slowing momentum, demonstrated by soft domestic demand and weak imports.

The UK is set to expand at 1.3 percent in 2019, 0.1 percentage points higher than its April forecast, and reach 1.4 percent in 2020. The upward revision reflects a better-than-anticipated first-quarter performance boosted by pre-Brexit inventory increase and stockpiling. But, the uptick is likely to be partially offset by payback over the rest of the year, said the IMF.

For the emerging market and developing economy, the growth is expected to be 4.1 percent in 2019 and 4.7 percent in 2020, 0.3 and 0.1 percentage points lower, respectively, than in April.

China's growth is forecasted at 6.2 percent in 2019 and 6.0 percent in 2020, 0.1 percentage points lower each year compared to the April projection.

Trade risks intensified

The IMF warned in the WEO that business confidence and financial market sentiment have been buffeted since early 2018 by U.S. tariffs, trading partner retaliations as well as prolonged Brexit.

"The principal risk factor to the global economy is that adverse developments — including further trade tariffs, U.S. auto tariffs, or a no-deal Brexit — sap confidence, weaken investment, dislocate global supply chains, and severely slow global growth below the baseline," said the IMF.

The IMF's annual External Sector Report Trade released last week also warned that trade conflicts are weighing on the global economy.