Reuters China’s GDP could be cut by 1.6% in 2019 if trade tensions with the U.S. continue to intensify, the IMF said.
A U.S. trade war with China and other countries could reduce global growth by more than 0.8% in 2020, according to the International Monetary Fund on Monday.
In its annual report on the health of the global economy, the IMF said the disruption from trade tensions would hit China the hardest, with GDP losses of more than 1.6% in 2019. The U.S. would lose more than 0.9% of GDP in 2019. Nafta trading partners would have 1.6% lower GDP in 2020 if the tariff measures are implemented.
The IMF study includes all the trade actions taken to date between the U.S. and China and also assumes that the U.S. follows through with a 25% tariff on all imported cars and car parts.
If the imported car tariffs are not put in place, the negative impact on the U.S. would be roughly halved, while China would still be hit hard, the agency said.
The IMF lowered its global growth forecast for 2019 given the trade tensions, including the $200 billion of tariffs imposed on U.S. imports from China.
“Avoiding protectionist reactions to structural change and finding cooperative solutions that promote continued growth in goods and services trade remain essential to preserve and extend the global expansion,” the IMF said.
The IMF said it detected some weakening in industrial production from the trade tension, even though surveys of sentiment among purchasing managers has remained strong.
Industrial production data for the United States, Japan, and Germany indicate greater moderation in capital-goods-producing sectors than for the rest of manufacturing, which could signal weaker capital spending, the agency said. International trade in goods appears to have slowed this year as well.
