Tariffs that have been imposed or threatened by the United States and China could shave 0.8% off global economic output in 2020 and trigger additional losses in future years, the International Monetary Fund said on Thursday. IMF spokesman Gerry Rice said trade tensions were beginning to affect a world economy that is already facing challenges, including a weakening of manufacturing activity not seen since the global financial crisis of 2007-2008. Rice, speaking at a regularly scheduled IMF news conference, said the global lender is due to release a new revised economic outlook next month, but provided no details. The pace of world economic activity remained subdued, with rising trade and geopolitical tensions causing uncertainty and eroding business confidence, investment and trade, he said. The IMF had previously forecast that the US-China trade war and other trade disputes threatened global growth in the future, but Rice said the impact was now being felt. "Trade tensions .... are not only a threat, but are actually beginning to weigh down the dynamism in the global economy," he said. "Our latests estimate is that ... the US-China tariffs, including those implemented and announced, could potentially reduce the level of global GDP by 0.8% in 2020, with additional losses in future years." That forecast is more gloomy than one earlier this year, when the IMF said tariffs already imposed and those planned could shave 0.5% off global economic output in 2020. Asked if the IMF now anticipates a global recession, Rice said that was not in the fund's baseline at the moment, although the IMF had used words such as "very precarious," "very fragile," and "delicate" to describe the economic outlook. "Let's not get ahead of ourselves. Let's wait and see," he said, noting the forthcoming world economic outlook would provide greater clarity. At the same time, Rice stressed he was not predicting or hinting that the IMF planned to forecast a recession.
