IMF warns Trump rights could affect global growth by 0.5%

The imposition of tariffs on imports by Donald Trump threatens to reduce global growth by 0.5 percentage point by 2020, warned the International Monetary Fund Monday, the largest manager the world, adding that tariff increases would also affect equity markets. The IMF believes that the global economy is expected to grow at a rate of 3.8 percent in 2020. But global growth could be significantly reduced if all trade measures under threat are implemented, with business implications. trust in the United States. Maurice Obstfeld, chief economist of the IMF, said: "The risk that current trade tensions will worsen – with negative effects on confidence, asset prices and investments – is the biggest threat in the short term. for global growth. "

Financial markets were "globally complacent" on business risks because the measures imposed up to here "apply frankly to a rather narrow range of exports", but would be much larger if they were applying to cars and tit-for-tat rate increases In an interview with the Financial Times Larry Fink, managing director of BlackRock, the world's largest investment group, said that it's the only way to save money. another series of tariffs would slow world growth and could lead to a 10 to 15% drop in the stock market.

"Markets say it's not just a conversation, there's stuff," said Fink, highlighting fears of a second wave of tariffs between US-based companies. United and China. "It comes down to whether the US is imposing another $ 200 billion in tariffs, and what China is doing," he added. "This would create more uncertainty … If we have greater trade barriers, global GDP will decline and profits will be affected."

Fink says the benefits of globalization are being questioned for the first time in its four-decade career

BlackRock's quarterly results indicated a significant slowdown in the influx of investors.

But the IMF has expressed hope that the predictions of a trade war would change mindsets in the world's largest economies, beginning with the United States, again on the path of cooperation from increasingly intense clashes.

Updating its April economic outlook, the fund has reduced its growth outlook in many countries to reflect the weakness of the first quarter of this year, and warned that it will worsen if already imposed American tariffs are transformed into a complete commercial war.

"Growth projections have been revised downwards for the euro area, Japan and the United Kingdom, reflecting negative surprises at the beginning of 2018," the fund said.

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Overall, the IMF reduced its European growth estimated at 0.2 percentage point for 2018 to reflect a disappointing first quarter of the year, but left its global forecasts unchanged.

On the US President's tariffs, the fund said: "This could derail the recovery and depress medium-term growth prospects, both by their direct impact on resource allocation and productivity, as well as by Increasing Uncertainties 19659002] Obstfeld notes that smaller economies are the most exposed. "The more your economy is open, the more you depend on exports, the more vulnerable you will be," he said.

There was little evidence that US tariffs would reduce its trade deficit in the coming months and instead thought that the US current account deficit was likely to increase over the next few years, reflecting strong demand resulting from tax cuts. and public spending increases

A larger trade deficit would probably only push the administration to impose protectionnist pressures are even bigger, he warned.