International Monetary Fund maintains 3-pct growth forecast for S. Korea

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The postwar global trading system risks being torn apart, the International Monetary Fund has warned, amid concern over the tariff showdown between the U.S. and China.

The International Monetary Fund on Tuesday lifted South Africa's economic growth forecast for the next two years citing the election of a new political leadership, but warned growth would underperform if no economic reforms were carried out.

"The first shots in a potential trade war have now been fired", IMF Chief Economist Maurice Obstfeld said in a foreword to the fund's outlook, reiterating IMF's warning earlier this month that the global trading order is in danger of being "torn apart".

Escalating trade restrictions and retaliation is another risk to the outlook, it said, noting the first shots in a potential trade war involving the U.S. have now been fired.

The IMF stuck to its most recent world growth forecast of 3.9 per cent for both this year and next.

While the world economy is set to expand by 3.9pc this year and next, this will trend downwards from 2020 amid increasing threats to growth, the latest publication of the World Economic Outlook revealed.

The Trump administration has maintained that Republican tax cuts passed last year would allow the United States to maintain sustained gross domestic product growth above 3 percent for years and defy forecasts that USA budget deficits will balloon over the coming decade.

"Business confidence is likely to gradually firm up with the change in the political leadership, but growth prospects remain weighed down by structural bottlenecks", the worldwide lender said in its latest World Economic Outlook published in Washington.

In general, economy of the CIS member countries will grow 2.2 percent in 2018 and 2.1 percent in 2019, according to analysts of the fund.

The fund said strong growth would help dispel some of the remaining legacies of the financial crisis of a decade ago, by accelerating the end to unconventional monetary policies such as quantitative easing, boosting investment and healing labour market scars.

China has since announced a series of retaliatory measures, while Trump has continually demanded that Beijing act to reduce its trade surplus with the United States.

The IMF has bailed out scores of countries over the years, including the United Kingdom in 1976 when the minority Labour government borrowed £2.3bn from the fund to stabilise the value of the pound; Iceland in 2008; and Greece in 2010, 2012 and 2015. Global trade would fall 15 percent after five years and 16 percent in the long run under such a scenario, it said.