US-China trade tensions are a significant source of risk for the global economy, with ‘real spillover effects’ for emerging markets, top International Monetary Fund (IMF) officials said. Tobias Adrian, director of IMF’s monetary and capital markets department said the trade war had a significant impact on financial markets over the past two years.

“We urge policymakers around the world to continue to work together in order to resolve those trade tensions as that is significant source of uncertainty and a significant source of creation of downturn risks is trade uncertainty,” Adrian said.

The fight could set up a ‘domino effect’ for smaller economies, according to Evan Papageorgiou, deputy division chief of the same department. There are real spillover effects for emerging markets, he said.

The two officials, along with a few others, briefed media persons on the ‘October 2019 Global Financial Stability Report’ yesterday.

IMF chief economist Gita Gopinath early this week said global gross domestic product (GDP) would be reduced by 0.8 per cent if Washington and Beijing imposed the additional tariffs in October and December, but only 0.6 per cent if the two countries forgo the additional increases.

Fibre2Fashion News Desk (DS)

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