The U.S.-China trade war will slash 2019 global growth to the slowest rate since the financial crisis a decade ago, the International Monetary Fund warned on Tuesday.
The Washington-based organization said its latest World Economic Outlook forecast 2019 GDP growth at 3 percent, down from 3.3 percent in its April outlook.
The report painted a dreary outlook of the economy, weighed down by hundreds of billions of dollars in tariffs, which have taken a toll on investment and productivity, in addition to causing extreme market volatility.
"With uncertainty about prospects for several of these countries, a projected slowdown in China and the United States, and prominent downside risks, a much more subdued pace of global activity could well materialize," the report said. "To forestall such an outcome, policies should decisively aim at defusing trade tensions."
Although growth is projected to moderate next year, and to expand in 2021 through 2024, the IMF cautioned that if the world's two largest economies are unable to strike a trade deal, global growth will continue to deteriorate.
By 2020, trade tensions between the U.S. and China, now in their 15th month, are expected to reduce the global GDP by 0.8 percent. President Trump and his Chinese counterpart Xi Jinping could sign a partial deal as soon as next month.
Under that deal, China agreed to raise its agricultural purchases to between $40 billion and $50 billion from $8 billion to $16 billion and to make certain reforms on intellectual property and financial services. The U.S. will not raise tariffs on Oct. 15 from 25 percent to 30 percent. It’s still unclear whether Trump plans to halt another round of tariffs that are set to take effect on Dec. 15.