IMF warns of trade tensions in global outlook downgrade

The International Monetary Fund (IMF) on Tuesday downgraded its global growth outlook, citing trade tensions between the two largest economies.

The organization said it expects the world economy to expand by a "sluggish" 3.2% in 2019 after it expanded by 3.6% in 2018.

"The projected growth pickup in 2020 is precarious," the IMF said, noting that that an ongoing trade conflict between the US and China has dragged down growth for the global economy.

Read more: Opinion: Europe, not Donald Trump, holds the cards on trade 

For China, the "negative effects of escalating tariffs and weakening external demand have added pressure" on its economy. The US, which received a modest boost in the outlook, is on track to slow from 2.9% GDP growth in 2018 to 2.6% in 2019.

The IMF urged countries to take steps to resolve trade disputes and strengthen systems for international trade.

Read more: 2019: The year after peak global growth

EU in the crosshairs

The organization also identified US tariffs on European products, including threatened tariffs on cars, as having a destabilizing effect. Last year, Washington slapped tariffs on European steel and aluminum, triggering retaliatory tariffs on some American products exported to the EU. 

US President Donald Trump has threatened to impose tariffs on European vehicles, in a move that would particularly hurt German automakers.

There is an abundance of "potential triggers" that could further drag down the global economy, including auto tariffs, a no-deal Brexit and high debt levels, it added.

Germany's economy is expected to grow by 0.7% this year before picking up in 2020 with a projected 1.7% increase, the IMF said.

Read more: US begins investigation of France's planned tax on tech giants 

ls/amp (AFP, AP)

Each evening, DW's editors send out a selection of the day's hard news and quality feature journalism. You can sign up to receive it directly here.