On Monday, the International Monetary Fund’s economic counselor, Maury Obstfeld, said the global economy is expecting a growth rate of 3.9 percent, both this year and next. If that holds true, this would be the highest global growth rate since 2011.
While unveiling the IMF’s projections, Obstfeld also said that Donald trade war could potentially wipe up to half a trillion dollars off the global economy. He warned that financial markets are too complacent about the risas set to grow at 3.9 per cent this year and next, which would be its highest growth rate since 2011. Paradoxically, two of the economies contributing the most to that growth, for now, are the United States and China.
But Obstfeld revealed that the current IMF modelling shows global output could be about 0.5 per cent below current projections by 2020 if Trump’s threatened tariffs actualized and business investment fell as a result.
Though Donald Trump has declared that “trade wars are good and easy to win”, Mr Obstfeld added that the US was “especially vulnerable” because it would be “the focus of global retaliation” and a larger share of its exports would face higher tariffs.
Earlier this year, the IMF’s managing director, Christine Lagarde, warned that the US was in danger of “tearing apart” the post-war global economic system.
On Monday, in addition to warning about the devastation which could be inflicted by Trump’s trade war, Obstfeld also called out the glocal economic risks arising from political uncertainty in Europe, particularly the dangers around Brexit as the UK’s EU departure date approaches and tensions rise.