2019 could be a difficult year for the U.S. and China due to trade war.
The International Monetary Fund on Tuesday cut its growth forecasts for the United States and China, and news is not good.
Citing the recent waves of tariffs the world’s top two economies have imposed on each other, the clash between Washington and Beijing threatens to continue growing and cause damage other nations.
Maurice Obstfeld, the IMF’s chief economist, said at a media briefing about the fund’s latest World Economic Outlook: “When you have the world’s two largest economies at odds, that’s a situation where everyone suffers”.
China’s growth is now expected to drop to 6.2%, from 6.6% this year, according to the IMF. The new 2019 forecast is 0.2 percentage points lower than the fund’s previous forecast, reflecting the waves of new tariffs that have taken effect since then.
Despite healthy momentum in the U.S., which received a boost from recent tax cuts, IMF economists now expect growth to slow to 2.5% next year from 2.9% this year. They cut the 2019 forecast by 0.2 percentage points because of the trade conflict.
However, despite the notable drop of both countries, the US-China trade conflict is likely to be felt beyond the two economic superpowers.