IMF: Global political uncertainty weighs on growth outlook

Baku. 10 October. REPORT.AZ/ Global political uncertainty weighs on growth outlook.

Report informs citing RIA Novosti, The Wall Sreet Journal quotes the International Monetary Fund (IMF) report.

The report declares that from U.S. elections to Britain’s exit from the European Union to China’s shaky overhaul, top economic officials around the world are growing increasingly anxious about politics maiming global growth by propelling antitrade sentiment, suppressing investment and fueling market volatility. Ask any finance minister or central banker about leading risks to the global economy and you’ll get one giant worry from everyone: politics.

Trying to estimate the potential impact, the IMF calculates a sharp rise in tariffs and other trade barriers could raise import prices globally by 10%. That would translate into a 15% fall in exports over the next five years. Consumption would drop by 2%, and global economic growth would take a nearly 2-percentage-point downgrade, it said. Such a decline would push the global economy below a level some economists consider a technical recession. 

The IMF’s worst-case scenario is even more sobering. The combination could trigger an 18% decline in investment in some countries. Many countries would enter into deflation, the report states.