WASHINGTON/DAVOS: Global growth appears to have bottomed out but there is no rebound in sight and risks ranging from trade tensions to climate shocks makes the outlook uncertain, a top International Monetary Fund official said on Monday (Jan 20).
"Just in the very first weeks of the new year we have witnessed increased geopolitical tensions in the Middle East and we have seen the dramatic impact that climate shocks could have. We saw them in Australia as well as parts of Africa." The Fund said that an easing of tensions between the United States and China, which had stunted GDP growth in 2019, had boosted market sentiment, amid"tentative" signs that trade and manufacturing were bottoming out.The Fund's cautious outlook assumes that there are no additional flare-ups in US-China trade tensions but Georgieva warned that the root cause of the problem is not yet fixed.
The IMF upgraded China's 2020 growth forecast by 0.2 percentage point to 6.0 per cent because the US trade deal included a partial tariff reduction and cancelled tariffs on Chinese consumer goods that had been scheduled for December. These tariffs had been built into the IMF's previous forecasts. Eurozone growth also was marked down 0.1 percentage point from October, to 1.3 per cent for 2020, largely due to a manufacturing contraction in Germany and decelerating domestic demand in Spain.
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