US, China trade war could dent economic growth

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International Monetary Fund Managing Director Christine Lagarde on Thursday warned countries of the perils of a trade or a currency war, saying they could be detrimental to global growth and hurt "innocent bystanders".

China's growth is still expected to be more than 6% next year, but the IMF's chief economist Maurice Obstfeld warned Beijing to concentrate on quality and sustainability of growth, not quantity of growth.

"I will take (the country) out of this", he said.

The Outlook said the global economy is expected to grow at 3.7 percent this year and next year - down 0.2 percentage points from an earlier forecast, as the trade war started to hit economic activity worldwide.

The body now expects the US economy to grow at a rate of 2.5 percent in 2019, a 0.2 percentage point decline from its April estimates.

"We are seeing a growing debt crisis in many developing economies", stated LeCompte who also serves on United Nation expert groups that focuses on economic issues.

The International Monetary Fund has today cut its global economic growth forecasts for 2018 and 2019.

U.S. Treasury Secretary Steven Mnuchin is expected to meet with global finance officials in Indonesia this week during IMF and World Bank summits, though as of Monday he had no meetings scheduled with Chinese officials - as reported by Reuters.

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China and the United States have slapped tit-for-tat tariffs over the past few months, rattling financial markets as investors anxious the escalating trade war could knock global trade and investment.

"That said, risks could rise sharply, should pressures in emerging-market economies mount or if trade tensions escalate".

"An IMF team will visit Islamabad in the coming weeks to initiate discussions for a possible IMF-supported economic programme". These policies have contributed to a slowdown in economic growth, which is happening just as trade tensions with the USA are starting to bite.

The announcement followed the highest single-day loss in a decade in the stock market, which plunged by over 1,300 points, losing nearly Rs 270 billion of its capitalisation. Its forecast for China's 2018 GDP growth remains unchanged at 6.6%, while revised downward by 0.2 percentage points for 2019 to 6.2%.

"It also expects the economy to grow 1.4 per cent in 2019, down from a previous estimate of 1.7 per cent".

Washington simultaneously threatened to add tariffs to a further $267 billion (£205 billion) of products, which saw Beijing retaliate with 10 percent tariffs on $60 billion (£46 billion) of USA imports.

The model also includes the effects of a reduction in business confidence that reduces investment and leads to a tightening of financial conditions.

The exercise assumes that US President Donald Trump imposes tariffs on the remaining $267 billion worth of Chinese goods imports not already under punitive tariffs and China retaliates in kind.

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