IMF'S TRADE WAR OUTLOOK

PARIS : An all out trade war would slow the growth of the global economy, but not stop its expansion, with the United States and China also escaping a recession, according to forecasts published on Tuesday by the international Monetary Fund.

In its latest Economic Outlook report, the IMF conducted a series of calculations at the impact from the trade tariffs that the administration of US President Donald Trump has already implemented and has threatened to impose, as well as reprisals from China and other nations.

Yet, even in the worst case scenario, the IMF found that the disruption won't kill off growth and drag the global economy into recession.

The IMF's baseline forecast for the global economy is 3.7 percent growth in 2018, 2019 and 2020.

At the worst, which includes Trump pushing through with Tariffs on all Chinese goods and on imports of cars and car parts that spark a round of reprisals, as well as denting confidence and provoking a negative market reaction, the impact would be less than one percentage point on global growth.

Thus the expansion of the global economy would be reduced to around 2.9 percent  both next year and in 2020.

The near term impact of a full-fledged trade war on growth in China will be nearly double that of the  United States, according to the IMF estimates.

With 1.6 percentage point drop in growth in 2019, the expansion in China would slow from 6.2 percent in the baseline forecast to 4.6 percent, according to the IMF table.

Meanwhile, the United States would see a roughly 0.9 percentage point hit, damping growth from  2.5 percent next year to 1.6 percent.

The IMF only published country forecasts through 2019.

Japan would see its 2019 growth rate more than halved, from 0.9 percent to 0.4 percent, under the worst case scenario.

The eurozone would see growth rate drop from 1.9 percent to 1.5 percent. [AFP]