Although they are not trade organisations, it comes as no surprise that the annual meetings of the International Monetary Fund (IMF) and the World Bank currently under way in Bali, Indonesia, have been dominated by the issue of trade tensions, which have become a clear and present danger to the global economy. Financial markets may also have finally woken up to this: On Wednesday, the US equity markets plunged, followed by a sharp sell-off in Asian markets yesterday. In the run-up to the IMF-World Bank meet, the two organisations together with the World Trade Organisation (WTO) released a rare joint report which underlined the importance of global trade integration and the rising costs of trade tensions.
The IMF's October World Economic Outlook, which was unveiled at the meetings, presented a sobering picture. The fund downgraded its July projection of 3.9 per cent growth for the global economy in 2018 to 3.7 per cent. It cut its growth forecasts for 19 economies, including the United States, China, several Euro zone member-countries and emerging economies. Significantly, compared to the July projections, there was no upward revision of forecasts for any country or economic grouping for either 2018 or 2019. Moreover, the report cautioned that the latest projections do not incorporate the impact of further tariffs that the US has threatened to impose on imports from China and elsewhere, but which it has not yet implemented - which suggests that there is a further downside risk to even the latest, downwardly-revised projections.