Risk of a sharper decline in global growth has increased, according to the International Monetary Fund (IMF), which urged the United States and China to resolve their trade war.
In a report published on Monday, the fund projected a 3.5 percent growth rate worldwide for 2019 and 3.6 percent growth for 2020. Those are 0.2 and 0.1 percentage points below the funds last forecasts in October, making it the second downturn revision in three months.
“Global growth is expanding at a healthy rate, but we are seeing a slowing momentum,” the IMF’s head of research Gita Gopinath said, adding there were “many important downside risks to the global economy.”
In October, the IMF cut its global growth forecasts, citing increased trade tariffs between China and the United States. Weakness for German auto manufacturers due to new fuel emission standards, and soft domestic demand in Italy after recent sovereign and financial risks, were also hampering global growth, the fund said on Monday.
Advanced economies have been on a declining path in terms of growth and this is taking place more rapidly than previously thought, according to the report. They are forecast to grow two percent this year and 1.7 percent in 2020.
The IMF has also noted a growth slowdown in emerging economies, projecting a 4.5 percent growth rate in 2019, from 4.6 percent in 2018, before improving to 4.9 percent in 2020.
Speaking at the World Economic Forum in Davos (Switzerland) on Monday, IMF chief Christine Lagarde said: “After two years of solid expansion the world economy is growing more slowly than expected and risks are rising.”