China trade war: International Monetary Fund cuts global growth forecast

He says efforts are afoot to protect the interests of lower income segments of society

The IMF's baseline forecast for the global economy is 3.7% growth in 2018, 2019 and 2020.

The Chinese central bank will focus on the domestic economy when making adjustments to its monetary policy, Yi also said, indicating that the PBOC's decision-making will be influenced less than before by changes in the external environment such as recent interest rate hikes by the U.S. Federal Reserve.

The IMF said it was now predicting 3.7 percent global growth in both 2018 and 2019. Furthermore, China's debt to GDP ratio increased by around 100 percentage points, indicating border-lining financial crisis.

Growth in both the United States and China were expected to slow next year as a result of the trade dispute triggered by US President Donald Trump.

It's not just the world's two most powerful economies that stand to be affected by trade policy.

"India's growth is expected to increase to 7.3 percent in 2018 and 7.4 percent in 2019 (slightly lower than in the April 2018 World Economic Outlook (WEO) for 2019, given the recent increase in oil prices and the tightening of global financial conditions), up from 6.7 percent in 2017", it said in the WEO report.

The fund said risks to the short-term outlook for the world economy had "shifted to the downside".

Trump renewed his threat to impose tariffs on $267 billion worth of additional Chinese imports if Beijing retaliates further with its own higher levies on US products entering China.

Khashoggi 'hit squad' included a forensics expert and a former diplomat
Khashoggi is a Washington Post columnist and former general manager and editor-in-chief of Al Arab News Channel. Saudi Arabia is also unhappy about Ankara's growing proximity to the kingdom's Shiite rival, Iran.

While the damage from an all-out trade war wouldn't be catastrophic, slow growth can also pose problems.

When the world's two biggest economies are "at odds", that is going to create "a situation where everyone is going to suffer", Obstfeld said.

Finance Minister Umar had informed that foreign reserves need to be boosted by at least $8 billion, while ministry sources said International Monetary Fund could lend up to $10 billion.

"The possibility that China and USA resolve their disagreements would be a significant upside to the forecast", Obstfeld said. Iran, facing a new round of United States sanctions next month, also saw its growth forecast cut, the International Monetary Fund said.

China's rate of growth could decline by as much as a full percentage point or more by 2019 if a "worst-case" scenario materialises, involving further tariffs, a commensurate Chinese counter-response and a collapse in confidence by businesses and markets.

China and the United States have slapped tit-for-tat tariffs over the past few months, rattling financial markets as investors anxious the escalating trade war could knock global trade and investment.

In March, China set a target of "around 6.5%" growth for 2018, but a campaign to curb debt growth and cut down on financial risks has seen key economic indicators, such as infrastructure investment expansion, fall to record lows.

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