In a press conference on Tuesday 15th of October 2019, the IMF officials said that if the trade war continues, the global economy is going to face hard times in the coming months. According to IMF estimations, the global economy is going to slow down further to its lowest point since the financial crisis in 2008. The IMF estimates that the due to the trade war and imposition of tariffs on goods, the manufacturing sector is taking a hit, which is causing investors to pull out of the market and due to the multiplier effect, it is affecting the world economy.
IMF said that the world economic projections show that the global GDP for the year 2019 would reduce from 3.2% to 3%, and its main cause is the US-China trade war. They further added that the World Economic Outlook shows that the tariffs imposed by each side on the other would affect almost all sectors including the direct costs, market turmoil, and reduced investments and reduced productivity due to supply chain disruptions.
IMF estimates that if the tariffs planned for imposition in the year 2020 are put into effect, they would reduce global economic output by 0.8%, which is equal to $700 billion. IMF’s Chief Economist Gita Gopinath said in a statement that, “The weakness in growth is driven by a sharp deterioration in manufacturing activity and global trade, with higher tariffs and prolonged trade policy uncertainty, damaging investment and demand for capital goods.”