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IMF sees tentative signs of a bottom in global manufacturing and trade

By Alexander Bueso

Date: Monday 20 Jan 2020

IMF sees tentative signs of a bottom in global manufacturing and trade

(Sharecast News) - The world's economic watchdog offered a less glum view of economic prospects, but said that many risks remained and that were still few signs of a turning point in the data.
In its twice-yearly World Economic Outlook, the International Monetary Fund said there were "tentative" signs that manufacturing and global trade were putting in a bottom, with risk appetite having improved thanks to accommodative monetary policy, "intermittent" positive news on US-China trade talks and less concern of a no-deal Brexit.

A potentially sluggish economic recovery was still forecast, with growth in global gross domestic product seen accelerating from 2.9% in 2019 to 3.3% and 3.4% over the following to years.

But the GDP forecasts for 2020 and 2021 were trimmed by one and two tenths of a percentage point on the back of weaker growth in India and due to social turmoil in various emerging markets.

"However, there are few signs of turning points are yet visible in global macroeconomic data," the IMF said.

"Downside risks, however, remain prominent, including rising geopolitical tensions, notably between the United States and Iran, intensifying social unrest, further worsening of relations between the United States and its trading partners, and deepening economic frictions between other countries," the IMF added.

"A materialization of these risks could lead to rapidly deteriorating sentiment, causing global growth to fall below the projected baseline."

Officials at the Washington-based lender called for greater multilateral cooperation, a more balanced policy-mix at the national level, with the aim of raising economies' "resilience" and "growth potential" while increasing inclusiveness.

The IMF also called for "closer cross-border cooperation" to resolve grievances with the rules-based trading system, curb greenhouse gas emissions, and strengthen the international tax architecture.



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