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Global trade tensions, following the wave of customs charges launched by the Trump administration and the spiral of retaliation, will halt the current economic expansion as early as next year, according to the simulation presented by the International Monetary Fund (IMF) for the meeting of finance ministers and governors and presidents of central banks of the G20 held in Buenos Aires this weekend.
The IMF has prepared a paper on the world economic situation where it has left the alarm that risks even in the short term. "The risk-change scenario reflects a combination of old and new risks, some of which have already materialized – the most disruptive trade tensions and capital flow reversals," the IMF said, adding that "there is a combination of risk and reversal of capital flows," the IMF said. evolution towards more systemic levels
To better sensitize the G20 participants, the organization led by Christine Lagarde presented in detail a simulation of the negative impacts of four scenarios related to the ongoing commercial war process, but in Lack of appropriate policies and political cooperation.not yet included the assessment of the effects of the latest threats by Donald Trump put forward this week on the eve of the G20 ministerial meeting.
The most pessimistic scenario, in which US protectionist measures and retaliation of those affected are combined with loss of confidence on the part of investees. weavers would lead to the expansion of the world economy, with an even more pronounced slowdown over the next five years than was already anticipated by the IMF in its recent update of its forecasts.
The meeting adopted a statement in which the G20 representatives "recognize the need to intensify dialogue and actions to mitigate risk and build confidence."
Towards "Poor" Growth in the end of the five-year period
In the case of the most pessimistic scenario, confidence of economic agents, the negative impact on the global growth rate would imply a reduction of 0.4% the first year of the effect, would rise to 0.5% the second year, then decrease to 0.2% in the fifth year of projection. This coincides with the forecast announced last week that in 2020, the negative effect of trade tensions would result in a reduction of 0.5%. That would mean that, instead of a growth rate of 3.8%, it would decrease in 2020 to 3.3% already very close to the rate of 3.2% recorded in 2016 and considered by Lagarde as "The IMF , in its forecast update released last week, already signaled a slowdown in global growth from a "plateau" of 3.9% in 2018 and 2019, dropping to 3.7% in 2022 and 2023. If the most pessimistic scenario highlighted by the IMF materializes, the growth rate could fall to 3.4% -3.5% at the end of the five-year period.
It is recalled that these scenarios n & ## 39 not yet include the effects of an extension of US protectionism to all imports from China, after President Trump declared himself ready to go ahead to impose $ 500 billion in a interview with CNBC and the opening of a new potential conflict front, now on the foreign exchange market, sui te to a tweet on Friday the US president accusing China and the European Union of manipulating their currencies and interest rates from the central bank.
US Treasury Secretary Steven Mnuchin, G20 presenter in Buenos Aires, asked if investors should be concerned about the scenario of the currency war, replied that "no", but refused to elaborate on the subject.
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