US-China Trade Tensions To Reduce Global GDP Growth By 0.8% In 2020 - IMF

Trade tensions between the United States and China will likely reduce global GDP growth by around 0.8 percent in 2020 if left unresolved, the International Monetary Fund's chief economist Gita Gopinath warned on Tuesday

WASHINGTON (UrduPoint News / Sputnik - 15th October, 2019) Trade tensions between the United States and China will likely reduce global GDP growth by around 0.8 percent in 2020 if left unresolved, the International Monetary Fund's chief economist Gita Gopinath warned on Tuesday.

In its latest World Economic Outlook (WEO), the IMF lowered its global GDP forecast to 3.0 percent from 3.2 percent due to slowing economic activity and rising geopolitical and trade tensions.

"We estimate that the US-China trade tensions will cumulatively reduce the level of global GDP by 0.8 percent by 2020," Gopinath said at a news conference.

The IMF would welcome any steps from the two parties to de-escalate situation, she added.

The United States was previously due to increase tariffs on China to 30 percent from 25 percent today, but Washington decided to hold off on the duties after the two sides reached a truce last week.

The decision to not move forward with the planned tariffs will not have a significant impact on the current economic outlook, Gopinath said.

She said the decision to hold off on tariffs this month would reduce the negative impact on the GDP growth outlook "from 0.

8 percent to 0.7 percent."

US Treasury Secretary Steven Mnuchin has said that the new tariffs could go into effect on December 15 if the two sides fail to resolve their trade dispute.

Gopinath said that if the tariffs do not go ahead as planned in December, the negative impact would be "close to 0.6 percent."

The latest round of trade negotiations between the US and China took place on Thursday and Friday.

On Friday, President Donald Trump said that Beijing and Washington had agreed on the first phase of the trade deal, having reached consensus on Currency exchange, technology transfer, intellectual property, financial services and purchase of up to $50 billion worth of US agricultural goods by China.

The trade row between the world's two largest economies erupted in June 2018 when the United States imposed the first round of tariffs on Chinese exports, prompting Beijing to respond in kind. Since, the two countries have been engaged in a full-blown trade war but have also started negotiations to resolve their trade-related differences.