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US-China Trade War Could Reduce World GDP By 0.8% in 2020

WASHINGTON – Tariffs imposed or threatened by the United States and China could reduce global economic output by 0.8% in 2020 and cause more losses in the coming years, International Monetary Fund announced Friday.
Gerry Rice, a spokesman for the IMF, said trade tensions were beginning to affect the global economy which is already facing challenges, including a weakening of manufacturing activity unprecedented since the 2007-2008 global financial crisis, Reuters reported.
US Treasury Secretary Steven Mnuchin told Reuters he had not read the new IMF forecast yet, but did not expect such a big impact in the United States.
“I do not see such an impact in the United States,” he said about IMF forecasts after an event organized by the New York Times.
Rice told a regular news conference at the IMF that the global lender will release new economic prospects next month, but did not provide details.
Global economic activity has remained subdued, with trade and geopolitical tensions creating uncertainty and eroding business confidence, investment and trade, he said.
The IMF had predicted that the US-China trade war and other trade disputes were threatening future global growth, but Rice said the impact was now felt.
“Trade tensions are not only a threat, they are also beginning to weigh on the dynamism of the global economy,” he said, adding that tariffs between the United States and China could potentially reduce GDP by 2020, with additional losses in the coming years. ”
When asked that the IMF anticipate a global recession, Rice said it was not part of the fund’s baseline scenario at the moment. He noted that the IMF used terms such as “very precarious”, “very fragile” and “delicate” to describe the economic outlook.
“Let’s not wait, let’s wait and see,” he said, pointing out that the next global economic outlook would bring more clarity. Rice said he was not suggesting that the IMF foresaw a recession.
This forecast is bleaker than last year, when the IMF said tariffs already imposed and planned could reduce global economic output by 0.5 percent in 2020.
The global lender this week presented a new index of “global trade uncertainty” for 143 countries, based on its national reports and based on data dating back to 1996.
Last year, the index was multiplied by 10 compared to the previous summit, following the rise of tensions between Washington and Beijing, he added.
(Sahar News Monitoring Desk)

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