International Monetary Fund lowers global growth estimates

IMF upgrades forecast for Russia's growth to 1.8% in 2019

IMF: US Tariffs and Emerging Market Woes Lower Growth Outlook

But US growth will decline once parts of its fiscal stimulus go into reverse. "Notwithstanding the present demand momentum, we have downgraded our 2019 U.S. growth forecast owing to the recently enacted tariffs on a wide range of imports from China and China's retaliation".

"Notwithstanding the present demand momentum, we have downgraded our 2019 United States growth forecast owing to the recently enacted tariffs on a wide range of imports from China and China's retaliation", he said, adding that China's expected 2019 growth is also marked down.

Noting that growth in the United States, buoyed by a procyclical fiscal package, continues at a robust pace and is driving USA interest rates higher, Mr. Obstfeld said U.S. growth will decline once parts of its fiscal stimulus go into reverse.

For 2019 and 2023, the Fund's expectations are 3.6 and 2 percent, respectively, the updated World Economic Outlook report reads.

When the world's two biggest economies - the United States and China - are "at odds", that is going to create "a situation where everyone is going to suffer", Obstfeld said.

"But there is no denying that the susceptibility to large global shocks has risen".

In the medium term, the Fund estimates that GDP growth will be 1.2% against the 1.9% estimated in its spring forecasts.

Some energy-rich emerging market countries have fared better due to higher oil prices, with Saudi Arabia and Russian Federation seeing forecast upgrades.

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Trade tensions are expected to continue although Fund officials view US-Mexico-Canada trade agreement as a positive sign. "Our probability that we would attach to further bad news has gone up", Obstfeld said.

"The forecast does not incorporate the impact of further tariffs on Chinese and other imports threatened by the United States, but not yet implemented, due to uncertainty about their exact magnitude, timing, and potential retaliatory response", according to the International Monetary Fund. These global tariffs will hurt business confidence, investment and borrowing costs.

Emerging Asia continued to register strong growth, supported by a domestic demand-led pickup in the Indian economy from a four-year-low pace of expansion in 2017, even as activity in China moderated in the second quarter in response to regulatory tightening of the property sector and nonbank financial intermediation, it added.

The estimate for 2018 is 0.2 percent lower than its earlier forecast.

In September 2018 Donald Trump imposed tariffs worth $200 billion on Chinese goods and threatened to sign off on a further $267 billion - an escalation in a tariff war that, at that point, had only seen both countries levy tit-for-tat duties on each other's imports.

Washington has also imposed tariffs on steel and aluminium, citing national security concerns, and has also warned it could impose a 25% levy on imported cars and vehicle parts.

U.S. tariffs on China, and more broadly on auto and auto part imports, may disrupt established supply chains, especially if met by retaliation, it added.

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