IMF foresees global slowdown as US-China trade spat drags on

By Economic IndicatorsFOXBusiness

Should investors avoid Europe?

Bulltick Capital Markets' Kathryn Rooney Vera on China's economic slowdown, U.S. trade talks with China and the outlook for the global markets.

An ongoing trade war between the world’s two largest economies could contribute to slowing economic growth this year, according to the International Monetary Fund (IMF).

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In a report released on Monday, the global body cut its 2019 global growth forecast to 3.5 percent from previous estimates of 3.7 percent. For 2020, the IMF forecasts growth will be 3.6 percent.

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Underscoring the wobbly state of the global economy: China, the world’s second-biggest economy, on Monday reported 2018 growth of 6.6 percent, the weakest since 1990. Consumer demand and appetite for Chinese exports weakened last year and the IMF expects China’s growth to decelerate again this year — to 6.2 percent.

While the IMF maintained its forecast for U.S. growth – at 2.5 percent, White House officials have acknowledged the trade spat could put pressure on domestic data as well.

During an interview with FOX Business on Friday, White House Economic Council Director Larry Kudlow admitted that trade talks with China would impact both the U.S. and world economies.

“Will the China trade talks affect the economy? Yes because the China trade talks will have an impact on future growth in the United States and prosperity and jobs and profits. And actually world growth.”

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In addition to risks posed by the trade dispute, the IMF cited Brexit complications, as well as weakness in Europe and emerging markets as other reasons global growth could slow in 2019.

The World Bank and the Organization for Economic Cooperation and Development have also downgraded their world growth forecasts.

The Associated Press contributed to this report.