IMF steps up attacks on Donald Trump and issues fresh Brexit warning
Political risks are the greatest threat to the world economy, the International Monetary Fund (IMF) said today, in a thinly veiled attack on US Presidential hopeful Donald Trump.
In its half-yearly economic outlook, the Fund downgraded its outlook for the world's largest economies over the next two years and warned a growing backlash against trade, globalisation and openness would hurt the global economy.
"Political tensions have now made advanced economies a major locus of policy uncertainty," the IMF said today.
"Persistent stagnation, particularly in advanced economies, could further fuel populist calls for restrictions on trade and immigration."
While it does not expect the UK to fall into a recession as a result of its "dramatic" decision to leave the EU, the IMF said the vote could "introduce political and economic uncertainties that threaten to dampen investment and hiring throughout Europe".
The body expects the world will grow by 3.1 per cent this year, unchanged from its latest mini-update in July, where it significantly downgraded its forecasts made before the UK's referendum. Emerging markets will be doing more of the heavy lifting, however, with the advanced world only forecast to expand by 1.6 per cent, down from 2.1 per cent last year.
The IMF also dished out a hefty downgrade to the prospects for the US economy, which has faltered in the first half of the year. It expects the world's largest economy to add just 1.6 per cent in 2016, down from its July prediction of 2.2 per cent growth.
Without mentioning the Republican candidate by name, the fund said: "The Brexit vote and the ongoing US Presidential Election campaign have highlighted a fraying consensus about the benefits of cross-border economic integration".
Comparing the two events, the group said "tensions [have] afflicted the US political scene, where anti-immigration and anti-trade rhetoric have been prominent from the start of the current presidential election round."
Donald Trump has caused numerous controversies on the campaign trail with his pledges to build a wall along the Mexican border and crack down on overseas arrivals. Both Trump and his Democratic rival Hillary Clinton have also expressed their disapproval of the recently-signed Trans-Pacific Partnership between the US, Japan and a host of smaller Asian countries.
Away from political concerns, the IMF explicitly stated "dangerous" debt levels in China as one of its top three threats to the global economy.