World Economic Outlook: IMF projects 3.9% growth for 2018 and 2019

World
Europe

02:30

The International Monetary Fund warns rising US-China trade tensions could damage global economic growth. But, the IMF also says there's time for the two world's largest economies to avoid a trade war. CGTN's Daniel Ryntjes reports.

The engines of global growth are humming. The International Monetary Fund is projecting 3.9 percent growth for this year and next. And yet, the IMF's economist are casting a shadow over their own forecasts: the possibility of a trade war between China and the United States.

MAURICE OBSTFELD DIRECTOR OF RESEARCH, IMF "If we get into a cycle of very widespread actions and counteractions, we would begin to see significant economic effects. And that would be, whether you call it trade war or not, very worrisome."

The IMF sees related risks emerging from the recent U.S. corporate and personal tax cuts. They see just a short term boost leading to higher interest rates and rising debt which in turn exacerbates global trade imbalances.

The prescription from the IMF is to focus instead on policies to expand the benefits of globalization to those who have been excluded, using long-term pro-growth policies, like education and training in high technology.

MAURICE OBSTFELD DIRECTOR OF RESEARCH, IMF "At the IMF, we've been saying for a while now that the current cyclical upswing offers policymakers an ideal opportunity to make longer term growth stronger, more resilient and more inclusive. The present good times will not last for long. But sound policies can extend the current upswing while reducing the risks of a disruptive unwinding."

For now, the IMF is calling the current tough trade talk initiated by U.S. President Donald Trump a 'phony war', but one which could still escalate.

DANIEL RYNTJES WASHINGTON "So policymakers gathering here for these Spring Meetings of the IMF and World Bank are making the case that multilateral institutions can help countries negotiate their differences in order to avoid a trade war in which everyone would lose out. Daniel Ryntjes, CGTN, Washington."