The IMF has cut its outlook for world economic growth for the first time sine 2016

Main points from the new set of forecasts (Headlines via Reuters) )

  • Cuts global growth forecasts for both 2018, 2019 to 3.7 pct from 3.9 pct previously due to trade war friction, emerging market turmoil
  • Cuts 2019 US growth forecast to 2.5 pct from 2.7 pct previously; 2018 forecast unchanged at 2.9 pct
  • Cuts 2019 China growth forecast to 6.2 pct from 6.4 pct previously; 2018 forecast unchanged at 6.6 pct
  • Cuts 2018 urozone forecast to 2.0 pct from 2.2 pct previously; 2019 eurozone growth forecast unchanged at 1.9 pct
  • Balance of risks has shifted to downside due to escalating trade conflicts, tighter financial conditions
  • Emerging markets 2018, 2019 growth forecasts cut sharply due to difficulties in Argentina, Brazil, Iran, Turkey
  • Simulations show global GDP output would be reduced by 0.8 pct in 2020 if US imposes all threatened tariffs and trade partners retaliate, compared to baseline without these tariffs

These from the IMF's update to its World Economic Outlook

"U.S. growth will decline once parts of its fiscal stimulus go into reverse," IMF chief economist Maurice Obstfeld said in a statement. "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."

  • "there is no denying that the susceptibility to large global shocks has risen,"
  • "Any sharp reversal for emerging markets would pose a significant threat to advanced economies."


Well, that sucks. Let's hope the worst fears on susceptibility to shocks are avoided. I am never much of a doomer, so I expect the muddle through will continue.