IMF: Global Growth Will Decline to Lowest Level Since Financial Crisis Due to Trade War

Investors aren’t the only ones looking closely at the U.S.-China trade war as the world authority on finances, the International Monetary Fund (IMF), is keeping a close watch on negotiations. If the trade war remains unresolved, the IMF is predicting that global growth will decline to its lowest level since the financial crisis in 2008.

Per the IMF’s most recent World Economic Outlook projection, it reveals that 2019 GDP will grow at a rate of 3.0%, which is less than the 3.2% projection in July. This doesn’t bode well for the IMF’s new managing director Kristalina Georgieva who will need to tackle a bevy of economic issues.

Per a CNBC report, the IMF said “that by 2020, announced tariffs would reduce global economic output by 0.8%. Georgieva said last week that this translates to a loss of $700 billion, or the equivalent of making Switzerland’s economy disappear.”

“The weakness in growth is driven by a sharp deterioration in manufacturing activity and global trade, with higher tariffs and prolonged trade policy uncertainty damaging investment and demand for capital goods,” IMF Chief Economist Gita Gopinath said in a statement.

IMF’s World Economic Outlook, Oct 2019

Will the U.S. be better able to mute the effects of slower global growth versus international equities? The Direxion FTSE Russell US Over International ETF (NYSEArca: RWUI) offers investors the ability to benefit not only from domestic U.S. markets potentially performing well but from their outperformance compared to international markets.

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Worries of slowing global growth and inverting yield curves haven’t slowed down the U.S. For investors who are worried that U.S.-China trade wars will feed into more weakness for U.S. equities, they can feel at ease knowing that when it comes to relative value ETFs, the United States is still the place to be.

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