The latest outlook from the International Monetary Fund about the prospect of the global economy states that growth in the world economy is still sluggish and a bouncing back of it is not assured even in 2020.

That forecast was released by the IMF on Tuesday and it further conducted a downward review of the global growth forecast for 2019 and 2020 because of the chances of growth still remained “subdued” and there is headwind pressure on global trade.

According to the revised forecast of global economic growth by the IMF, in 2019, growth will by at 3.2 per cent and would later rise to about 3.5 per cent in 2020. Both these projects were lower by 0.1 per cent in then the forecast of the agency made in April.

Terming the projected and possible uptick in the global economy for 2020 to be “precarious”, the IMF said tat the projection has been made assuming that there would be an improvement of the environment for emerging markets and there is progress towards finding a solution to end the trade war between the United States and its trade partners.

“If the current tariffs continue to be in place, and if there is a further escalation that includes all of trade between the US and China, then that would shave off about half a percent from the level of global GDP in 2020,” Gita Gopinath, the IMF’s chief economist, told CNN Business’ Julia Chatterley.

After a meeting between the US president Donald Trump and his Chinese counterpart Xi Jinping on the sidelines of the G20 Summit in Osaka, Japan at the end of June, the US and China decided to restart the stalled process of negotiations on trade between the two countries.

But still import tariffs persist on goods of the two countries worth billions of dollars.

Warnings of further disruptions because of a possible US tariff on auto imports and a no-deal or a bad deal Brexit was also issued by the IMF. According to the analysis of the institution, these two incidents would “sap confidence, weaken investment, dislocate global supply chains and severely slow global growth.”

Such risks would not be possible to be dealt with by looser central bank policy, Gopinath said.

“It is not going to be enough for monetary policy to be the only game in town,” she said while also calling on countries to contemplate increasing government spending to spur economic growth in the long-term.

The IMF however pointed out at the US economy to be one bright spot as it did an upward revision of the largest economy of the world for 2019 at 2.6 per cent from 2.3 per cent based on the stronger-than-expected first quarter performance of the economy.

(Adapted from CNN.com)

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