IMF Downgrades Global Growth, Hikes Inflation Outlook As US Trade War Impacts Materialize

A long-awaited report from the International Monetary Fund (IMF) is putting a price on America’s retreat from the global stage. On Tuesday, the UN’s financial agency downgraded global growth outlooks, warning that Trump’s “Liberation Day” required global economists to “jettison our projections.” It now sees global growth at 2.8%, down 0.5% from its last report. And the US is leading the decline.

• The IMF forecasts the US economy to grow 2.7% this year in its Q1 report — it now sees the US growing just 1.8%, a 33% decline, and well below global growth.
• They also see US headline inflation at 3% this year, up from 2% in its last report — with “stubborn price dynamics in the services sector” and supply shocks weighing heavily in the data.

Meanwhile, elsewhere: The IMF sees China’s growth at 4% this year and next, a decline from earlier estimates. And it warns that if the trade war is prolonged, losses between the US and China could become even greater in the coming years. Still, Americans are waiting to feel the impacts. Citigroup Chief Economist says that the “negative impact of tariffs [will be] felt mainly in the second half of the year.” But like all forecasts, things could always change based on the policy of today — and we know well that changes by the minute in today’s world.