International Monetary Fund warns trade tensions could disrupt global growth

The report comes as US President Donald Trump has imposed steep tariffs duties on $34 billion in imports from China, with another $200 billion coming as soon as September, on top of duties on steel and aluminum from around the world including key allies.

The International Monetary Fund (IMF) has revised the growth rate of sub-Saharan Africa's economy to 3.8% for 2019, up from April's growth projection of 3.7%.

"Amid rising tensions over worldwide trade, the broad global expansion that began roughly two years ago has plateaued and become less balanced", said IMF economic counsellor and director Maury Obstfeld.

The IMF left unchanged its global growth forecasts at 3.9% for both 2018 and 2019, compared to its previous forecast issued in April.

"The IMF had pointed out in April that good times in the global economy will not last and that "jarring" contradictions between growth momentum and a conflict over trade" will ultimately slowdown the global economy.

The impact is not just in terms of prices but the damage to business and financial market sentiment, which would lead to a "negative shock to investment".

However, the International Monetary Fund numbers are lower than the United Nations growth estimate of 7.5 per cent for this year and 7.6 per cent for the next year made in May in the World Economic Situation and Prospects.

The IMF also warned that a global trade war threatened worldwide growth and flagged uncertainties in the EU.

However, the report said that without steps to "ensure the benefits are shared by all, disenchantment with existing economic arrangements could well fuel further support for growth-detracting inward-looking policies".

The IMF, however, noted that even the USA growth could decelerate over the next few years, as the long cyclical recovery ran its course and the effects of temporary fiscal stimulus waned.

"Its growth is set to increase from 0.8 percent in 2017 to 2.1 percent in 2018 and 2.3 percent in 2019 (0.4 percentage point higher than in the April WEO for 2019) on the back of an improved outlook for oil prices".

Forecasts for the United States and China were both unchanged, with US growth pegged at 2.9 percent in 2018 and 2.7 percent in 2019.

But for the Euro zone, it cut the growth projections by 0.2 per cent to 2.2 per cent for this year and by 0.1 per cent to 1.9 per cent for next year.

In contrast, GDP continued to grow faster than potential and job creation was still robust in the United States, driven in large part by recent tax cuts and increased government spending.

Italy and France would then see their growth fall even further in 2019.

The IMF said that if these threats are implemented, it could reduce annual global economic output by 0.5 percent from projections for 2020.

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