She said global gross domestic product would be reduced by 0.8% if Washington and Beijing imposed the additional tariffs in October and December, but only 0.6% if the two countries forgo the additional increases. However, the forecasts are more promising for distressed emerging markets like Argentina, Turkey, and Iran.
Although he said there was a slight upward revision for growth this year, mostly from strong agricultural production early in the year, he said the growth was not high enough to lift -- to turn the country's per capita growth into positive territory.
Now, the big question is what India should do to reverse the slowdown.
Explaining the cut in growth projection for India, the WEO said: "India's economy decelerated further in the second quarter, held back by sector-specific weaknesses in the automobile sector and real estate as well as lingering uncertainty about the health of non-bank financial companies". This has kept labour markets buoyant and wage growth and consumption spending healthy in advanced economies.
"Possible triggers for such an episode include worsening trade and geopolitical tensions, a no-deal Brexit withdrawal ... and persistently weak economic data pointing to a protracted slowdown in global growth", it stated.
Thus far, the International Monetary Fund said central banks have managed to blunt the impact of the slowdown with tools such as low interest rates.
Whereas there's been important progress on banking rules, capital requirements and liquidity ranges for the reason that disaster, commerce coverage is a brand new risk for stability, he stated.
Growth in emerging markets and developing economies has also been revised down to 3.9 per cent for 2019 (compared to 4.5 per cent in 2018), owing in part to trade and domestic policy uncertainties and to a structural slowdown in China, she said. Growth in trade in the first half of this year slowed to 1 percent, the weakest annual pace since 2012.
"At 3 per cent growth, there is no room for policy mistakes and an urgent need for policymakers to cooperatively deescalate trade and geopolitical tensions".
Gopinath blamed the slowdown on rising commerce limitations, uncertainty surrounding commerce and geopolitics, and structural components, corresponding to low productiveness progress and an getting old inhabitants in developed nations. The Fund predicts 2.8 percent inflation in the country for 2019, and 3 percent for 2020. She suggested that would boost confidence and rejuvenate investment. In countries where activity has weakened or could decelerate sharply, fiscal stimulus can be provided if fiscal space exists and fiscal policy is not already overly expansionary.
He noted the International Monetary Fund had also called on countries including Australia to provide fiscal stimulus and invest in infrastructure to support the economy and improve productivity.
"While monetary easing has supported growth, it is essential that effective macroprudential regulation be deployed today to prevent mispricing of risk and excessive buildup of financial vulnerabilities", she informed reporters in Washington. The only significant fiscal action has been taken in the United States where the budget deficit has been increased to provide billions of dollars in tax cuts for corporations and the ultra-wealthy.