Trade Tensions
The IMF said the risks facing the global economy included trade tensions denting investment, the continuing impact of low interest rates on investors’ risk appetite and disinflationary pressures that would make servicing debt harder, and constrain central banks’ ability to use monetary policy in downturns.

Trade was also a main concern last week in the IMF’s annual External Sector Report, with Chief Economist Gita Gopinath warning that such conflicts are weighing on the global economy.

“It’s absolutely urgent to end these trade wars as soon as possible, to not escalate, and also to roll back the tariffs in place,” Gopinath said in an interview with Bloomberg’s Tom Keene ahead of Tuesday’s report. “That will have a big boost to business sentiment that will raise investment and be good for the global economy.”

In the U.K., a six-month Brexit extension announced in April “provided some initial reprieve,” the IMF said. The fund raised its 2019 growth estimate for the economy by 0.1 point to 1.3%, but the forecast assumes an “orderly Brexit” and the ultimate form of the transition is “highly uncertain.”

Other Highlights

- The Washington-based fund boosted its overall growth projection for advanced economies by 0.1 point to 1.9% in 2019.
- The IMF lowered the estimate for emerging-market and developing nations by 0.3 point to 4.1%. That pace was seen rebounding the following year to 4.7%.
- It left its euro-area growth projection unchanged at 1.3%, while lowering Japan’s 0.1 point to 0.9%.

The estimate for Brazil was cut by 1.3 point to 0.8% on persistent uncertainty about pensions and other reforms.

--With assistance from Zoe Schneeweiss and Shawn Donnan.

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