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The world economy could contract by the size of the combined French and German economies, if there is a broad-based trade war between the world’s major economies, the International Monetary Fund (IMF) has told the BBC.

It comes as concerns are heightened ahead of the possible re-election of Donald Trump.

Trump says he plans to introduce a universal tax or tariff of up to 20% on all imports into the US, while the European Union is already planning retaliation if Washington goes ahead with the new levy.

Last week, Trump said “tariff is the most beautiful word in the dictionary”, and global markets and finance ministers are now beginning to take seriously the prospect of him enacting the ideas.


IMF Deputy Managing Director Gita Gopinath said the Fund could not yet assess the specifics of Trump's trade plans, but thinks that “if you have some very serious decoupling and broad scale use of tariffs, you could end up with a loss to world GDP of close to 7%".

"These are very large numbers, 7% is basically losing the French and German economies. That's the size of the loss that would be," she continued.

Ms Gopinath also said tariffs worth hundreds of billions of dollars “is very different from the world we’ve lived in over the past two of three decades”.

The IMF’s deputy chief said another of the Fund’s main messages at its Annual Meetings was to warn on ballooning levels of global government debt.

She said the current period of steady economic growth was a “moment to rebuild your fiscal buffers” as “this will not be the last crisis. There will be additional shocks. You will need the fiscal space to respond. And now is the time to do it”.

Ms Gopinath said it was also necessary to “look at the bright side” with a resilient world economy after “some very tough knocks”.

She suggested the world economy had seen a soft landing from the multiple crises.

“Past experiences with bringing down inflation have not been with a soft landing. It was a big, big increases in unemployment. So that was a big hit, and it has turned out to be much better than many feared”, she said.

Ms Gopinath added that it was a “good win” for central banks everywhere that inflation has come down without high unemployment. But that now was the time to rebuild resilience in a fragile world.

b0rn2fuck:
World war already on

jUeLiZ:
why can't the world embrace peace.... what are they all fighting for.... even if another country emerges as world power, what will be their benefit... what is the essence. For me the US as the world power is doing well...

jUeLiZ:
why can't the world embrace peace.... what are they all fighting for.... even if another country emerges as world power, what will be their benefit... what is the essence. For me the US as the world power is doing well...

Emu4life:
The US and West got it wrong when they wanted to impose Homosexuality on Nations. They did that with Democracy and received little opposition but it seems Homosexuality is clashing with Culture and Morals of so many Countries.

Let's not talk about the Unilateral sanctions US is imposing on Weak Nations.
The Human mind is born to be free. If you keep oppressing a person, it will only take time for the person to revolt, that's what's happening

Emu4life:
Nonsense!!! So that you can continue to manipulate weaker Countries.
A Multi-Polar World we are heading to

jUeLiZ:
why can't the world embrace peace.... what are they all fighting for.... even if another country emerges as world power, what will be their benefit... what is the essence. For me the US as the world power is doing well...

jUeLiZ:
But Russia was also sanctioned and Russia is not a weak Nation. The truth is that someone has to be the boss, to police and instill discipline if not everyone will just be behaving anyhow. I don't like the US idea of imposing homosexuality on nation....but this global unrest will affect the world economy and it will affect us all.