International Monetary Fund cuts 2019 global growth estimate to 3%

IMF fires warning on trade war as manufacturing pain hits global growth

Trade war drags global growth to slowest rate since financial crisis, IMF says

Its 2019 projection for Canada foresees economic growth of 1.5 per cent, rising to 1.8 per cent growth in 2020 - down from the previous estimate of 1.9 per cent growth in 2020.

The International Monetary Fund is further downgrading its outlook for the world economy, predicting that growth this year will be the weakest since the 2008 financial crisis primarily because of widening global conflicts.

The world economy is projected to grow only 3 per cent this year and 3.4 per cent next year amid a "synchronised slowdown", according to the WEO.

WEO said India's growth in 2019 is sharply lower than the 6.8 per cent in 2018 "for idiosyncratic reasons, but is expected to recover in 2020".

"In India, growth softened in 2019 as corporate and environmental regulatory uncertainty, together with concerns about the health of the nonbank financial sector, weighed on demand", the report said.

In the Euro area, growth is projected to be only 1.2 percent this year and 1.4 next year, with the German economy expected to grow by a dismal 0.5 per cent this year.

The IMF said that in India, monetary policy and broad-based structural reforms should be used to address cyclical weakness and strengthen confidence.

Faced with a slowdown in several sectors of the economy, Finance Minister Nirmala Sitharaman had announced a number of policy measures to support a recovery including slashing the corporate tax rate and a rollback of surcharges on foreign portfolio investors.

The IMF revised its 2019 GDP growth forecast for the Asian financial hub to 0.3 percent, from 3.0 percent in 2018. The report called for a "credible fiscal consolidation path" over the medium term to bring down elevated public debt, supported by measures to enhance the tax base and rationalize subsidy-spending. World output is projected to increase to a modest 3.4% in 2020 - still lower by 0.2% than the April projection. "At 3 per cent growth, there is no room for policy mistakes and an urgent need for policymakers to cooperatively deescalate trade and geopolitical tensions", she said.

The global economy will also get a boost from recoveries or at least more shallow recessions in various stressed emerging market economies such as Turkey, Argentina and Iran.

"Earlier this month, in her first speech as International Monetary Fund managing director, Kristina Georgieva had said that a slower growth is expected in 2019 across almost 90 percent of the world". "Higher tariffs and prolonged uncertainty surrounding trade policy have dented investment and demand for capital goods, which are heavily traded", she said.

The IMF report said "risks seem to dominate the outlook", but recent monetary easing in many countries "could lift demand more than projected, especially if trade tensions between the USA and China ease and a no-deal Brexit is averted".

And Mexico is forecast to experience growth of 1.3 per cent next year, far better than the lacklustre 0.4 per cent gain envisioned for this year.

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