In a new economic forecast by the International Monetary Fund (IMF), China is projected to be hit harder than the United States by the effects of a worst-case trade war, with its GDP expected to fall by more than 1.6 percent in 2019, compared to about an 0.9 percent decline for the United States.
estimates were released on Oct. 9 on the Indonesian resort island of Bali—where
the IMF and World Bank annual meetings are being held—as part of an
update to IMF’s annual World Economic Outlook report.
growth estimates for this year and next were revised down, to 3.7 percent from
the IMF’s July forecast of 3.9 percent.
economist Maurice Obstfeld told a news conference in Bali that amid the trade
war, Beijing will face a “balancing act” between actions to shore up growth and
ensure financial stability.
revised its previously-released 2019 growth forecasts for China and the United
States after taking into account the trade war’s full impact. China’s 2019
growth forecast was reduced to 6.2 percent from 6.4 percent; the U.S. growth
outlook was cut to 2.5 percent from 2.7 percent.
all-out U.S.-China trade war scenario assumes that U.S. President Donald Trump
imposes tariffs on the remaining $267 billion worth of Chinese goods imports
not already under punitive tariffs and that China retaliates in kind; Trump
also imposes a 25 percent duties on all auto and vehicle-component imports; and
trading partners also enact retaliatory measures.
trade war will have a deep impact the global economy, according to the IMF’s
projections. Aside from the stunting of GDP growth in China and the United
States, global GDP would fall by more than 0.8 percent in 2020, and remain
roughly 0.4 percent lower in the long-term, compared to a scenario without the
effects of a trade war.
international organization also estimates that over the medium-term, growth in
China is expected to slow to 5.6 percent, “as the economy continues to make the
transition to a more sustainable growth path with continued financial
de-risking and environmental controls,” the report said.
contributed to this report.