Daily Management Review

IMF: Probability of global recession in connection with new duties is low


Managing Director of the International Monetary Fund, Christine Lagarde, said on Wednesday that the IMF currently does not see the threat of a global recession due to the escalation of the trade conflict between the US and China and potential US taxes on Mexican imports.

World Economic Forum
World Economic Forum
However, in an interview with Reuters, Lagarde said that the threat of new duties undermines the confidence of business and the market, and may slow down economic growth.

“We do not expect a recession [due to the threat of new duties],” said Head of the fund. “We do not expect currently recession under the baseline scenario.”

This week, the IMF lowered the forecast for economic growth in China in 2019 from 6.3% to 6.2% against the background of increased uncertainty due to the escalation of the trade conflict between Washington and Beijing.

On May 10, the USA increased the import duties on Chinese goods in the amount of $ 200 billion from 10% to 25%. Washington also began preparations for the introduction of higher duties on imports of Chinese goods for another $ 300 billion.

China, in turn, announced the introduction of increased duties on US goods worth $ 60 billion from June 1.

In addition, the United States presented new duties in the amount of 5% for all Mexican imports from June 10. The White House said that if Mexico does not take measures to "reduce or eliminate the number of illegal migrants" arriving in the United States, the duties will gradually increase and reach 25% on October 1.

The World Bank lowered its forecast for world economic growth for 2019 due to a slowdown in trade growth and a reduction in the flow of global investments.

According to the World Bank estimates, the growth of the world economy this year will slow to 2.6% from 3% in 2018. The January forecast suggested a more significant increase in 2019 - by 2.9%. Next year, the growth is expected to accelerate to 2.7%.

source: reuters.com