A suggestion that the global economy will fall into a recession is false, however, according to an unnamed International Monetary Fund (IMF) member talking to Reuters on Friday, as the global financial body gears up to release a new economic outlook report.
The official, who is not authorised to make public statements, explained that while "trade tensions are weighing on growth [...] we really don’t see recession in the current baseline. I think we’re far from that”.
“While manufacturing activity has been weak, we also see resilience in the services sector and consumer confidence is holding up. The question is how long that resilience can last, and we are monitoring carefully all indicators”, the anonymous official said, cited by Reuters.
This statement differs significantly from what was asserted by IMF spokesman Gerry Rice at a press briefing on Thursday in which he spoke of "a weakening in manufacturing activity. In particular, to levels not seen since the global financial crisis actually".
Rice also announced that the IMF team would visit Washington later this month in a bid "to continue the discussions on the authority's crisis response measures".
The divergent statements from within the IMF come amid an ongoing trade war between China and the US. In the latest development, US President Donald Trump on Thursday announced plans to delay a 25 percent increase on $250 billion (£200bn) worth of Chinese goods from 1 October to 15 October, after the move was declared in August following a period of stagnation and rhetoric from Trump that he was “winning” the trade war.
The president subsequently slapped a 10-percent tax on $300 billion of Chinese goods active from September, even as rumours that the administration would abandon tariffs due to recession fears began to circulate.
Recession concerns were given more fuel from mid-August, as the Dow Jones saw a collapse of 800 points. Additionally, over 70 percent of economists participating in a study released by the National Association for Business Economics earlier in the month predicted a recession before 2021.
At the same time, China has been reciprocally using the trade conflict to focus on its internal market, implementing dramatic shifts to boost domestic consumption, as opposed to being a primarily export-dominated economy.
The global economic outlook report is released twice a year to align with IMF spring and fall meetings in which the body publishes predictions for the global gross domestic product (GDP) for current and subsequent years.