The Bull

Monday 18

February, 2019 5:35 AM

IMF's Lagarde warns of worse trade hit to global economy

IMF's Lagarde warns of worse trade hit to global economy

The impact of escalating trade tensions on global growth are worse than feared just one month ago...

Share |

29.11.2018 05:06 PM

The impact of escalating trade tensions on global growth are worse than feared just one month ago, and threatened US auto tariffs could cut a large chunk out of the world economy, the IMF said Wednesday.

Just last month, the International Monetary Fund warned of the dangers of the trade frictions -- notably between the United States and China, which have exchanged tariffs on hundreds of billions in products.

But IMF chief Christine Lagarde said those headwinds "could have slowed momentum even more than we had expected."

In a report for the Group of 20 leaders meeting in Buenos Aires, the IMF said auto tariffs, if imposed, could cut three fourths of a percent off the global economy.

Emerging market economies, especially China and the euro area, are already seeing their economies slow, while a "no-deal Brexit could further dent confidence," Lagarde said in a blog post that accompanied the report.

The report said trade and Brexit risks "remain acute," and the uncertainty itself creates difficulties for companies by tightening credit conditions.

Investment would be reduced further if President Donald Trump follows through on his threat to impose steep tariffs on auto imports from all countries except Canada and Mexico, which would result in retaliation from trading partners on US exports.

An IMF calculation "suggests that the resulting short-term losses could lower global GDP by about 3/4 percent."

Trump has threatened to impose tariffs on autos as part of his aggressive trade strategy focused on preserving US jobs. He also has hit half of US imports from China with steep punitive tariffs, which has drawn retaliation from Beijing.

But he is due to meet in Buenos Aires with Chinese leader Xi Jinping, and a White House official said Tuesday that Trump sees a "good possibility" for a deal to defuse the trade frictions.

Lagarde warned the G20 gathering in Argentina that "the global economy faces a critical juncture."

"We have had a good stretch of solid growth by historical standards, but now we are facing a period where significant risks are materializing and darker clouds are looming."

She again stressed that "rising trade barriers are ultimately self-defeating for all involved. Thus, it is imperative that all countries steer clear of new trade barriers, while reversing recent tariffs."
  • Trump to get update on China trade talks

    US duties on $US200 billion worth of Chinese imports are set to rise to 25 per cent from 10 per cent if no deal is reached by March 1 to address US demands

  • SA govt unveils Repat Hospital plan

    The South Australian government has unveiled its master plan to redevelop Adelaide's Repatriation Hospital.

  • US-China talks to boost Aussie market

    Australia's share market is tipped to open higher on Monday after optimism surrounding US and China trade talks.

  • The Week Ahead

    In Australia, the December quarter Wage Price Index release dominates the local agenda in the coming week.

  • ASX closes flat as more companies report

    The Australian sharemarket has managed to finish in positive territory as more companies reported earnings results.

  • Stocks to watch

    Stocks of interest at the close of trade on the ASX on Thursday, February 14.

  • Germany to let NATO use its cyber skills

    Germany is to join the ranks of NATO countries making its cyber warfare skills available to the alliance to help fight hacking and electronic warfare, officials said on Thursday.

  • Domain posts $156.4m loss as listings fall

    Domain's first-half loss has widened to $156.4 million after Sydney and Melbourne's stumbling property markets forced it to take a large non-cash impairment.

  • Farmer denies scaring vegans with gunshot

    A WA farmer who asked vegans to stop filming calves on his property and leave, then fired a shot into farmland, says he wasn't trying to scare them.

  • CommSec Daily Report Friday

    The local sharemarket is mostly flat so far in a choppy session of trade. The ASX 200 is marginally higher by 6 points or 0.1% to 6066 points towards lunch after trading in a narrow 18 point band...

Index: Points Change Percent


© Copyright All rights reserved.