The International Monetary Fund-IMF has warned of a global trade war. According to the agency, global GDP could fall by up to 7 percent if top economies engage in a trade war. It will create a big crisis in the world economy. This warning came out in the joint meeting of the World Bank and the IMF.
The world has seen various crises including economic stagnation, high inflation, interest rates, falling consumer spending due to Corona. Added to this recently are geopolitical tensions and trade protectionism. The main obstacle to imposing restrictions on trade in a global alliance is the imposition of significant tariffs.
In this situation, the IMF has warned about the world economy. The organization says that the global GDP may shrink if the major economic countries get involved in the trade war. This contraction could amount to the combined GDP of France and Germany.
Trump has hinted at up to 20 percent tariffs on imports if elected president. In contrast, the European Union warned of counter-tariffs. The IMF fears that the world economy will be damaged by such countermeasures. Gita Gopinath, deputy managing director of the organization, said that if the global economy is isolated due to tariffs, the global GDP may shrink by about 7 percent.