WASHINGTON: The International Monetary Fund warned on Tuesday that rising US-China trade restrictions threaten to damage a steady global growth picture, but there was still time for the world’s two largest economies to step back from the brink.

The IMF, in its latest World Economic Outlook, kept its global growth forecasts for both 2018 and 2019 unchanged at 3.9 per cent after upgrades in January that were partly based on expectations of stronger US spending spurred by tax cuts.

But IMF chief economist Maurice Obstfeld said those effects will fade quickly, causing growth to slow in subsequent years.

“The prospect of trade restrictions and counter-restrictions threatens to undermine confidence and derail growth prematurely,” Obstfeld told a news conference ahead of the IMF and World Bank spring meetings this week, where trade is expected to dominate discussions.

Asked if a trade war was under way, Obstfeld said the United States and China had fired “some warning shots” on tariff plans but had not activated them.

Published in Dawn, April 18th, 2018