The global economy continues to slow and the primary problem is the geopolitical outlook. That is the primary message in the latest International Monetary Fund World Economic Outlook, released last week in anticipation of the fall meetings of that organization and the World Bank. Other dangers loom, however, and policymakers must be alert to a range of challenges that threaten global stability and well-being.
Growth in 2019 will be the weakest since the 2008 financial crisis. The IMF anticipates global growth of 3 percent, a drop of 0.3 percentage points from its April forecast, and a substantial reduction from the 3.6 percent expansion that occurred last year.
The risk factors are well known: the U.S.-China trade war, rising tensions in the Middle East and the Persian Gulf, Brexit and a slowdown in the largest economies. Trade disputes are the biggest problem. A growing readiness to impose tariffs on trade partners has slowed the growth in trade in the first six months of the year to 1 percent, the most anemic annual performance since 2012. Kristalina Georgieva, the new managing director of the IMF, warned that trade disputes could cost $700 billion in global output by the end of next year, about 0.8 percent of the world total.