…As IMF warns Trump trade war could cost global economy $430bn***
There has been a barrage of criticism in the US after President Donald Trump defended Russia over claims of interference in the 2016 elections.
At a summit with Russian President Vladimir Putin in Finland, Mr Trump contradicted US intelligence agencies, saying Russia had no reason to meddle.
The top Republican in Congress, House Speaker Paul Ryan, said Mr Trump must see that “Russia is not our ally”.
The president’s own intelligence chief publicly broke with him.
Russia is responsible for “ongoing, pervasive attempts” to undermine US democracy, Director of National Intelligence Dan Coats said in a statement.
Mr Putin denied the claim.
On Monday the US and Russian presidents held nearly two hours of one-on-one talks without their advisers in the Finnish capital Helsinki on Monday.
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What did President Trump say?
At a news conference after the summit, he was asked if he believed his own intelligence agencies or the Russian president when it came to allegations of meddling in the election.
“President Putin says it’s not Russia. I don’t see any reason why it would be,” he replied.
Mr Trump also blamed poor relations with Russia on past US administrations rather than Russian actions.
US intelligence agencies concluded in 2016 that Russia was behind an effort to tip the scale of the US election against Hillary Clinton, with a state-authorised campaign of cyber attacks and fake news stories planted on social media.
Mr Trump later backtracked, tweeting that he had “great confidence in my intelligence people”.
In the meantime, rising trade tensions between the United States and the rest of the world could cost the global economy $430bn (£324bn), with America “especially vulnerable” to an escalating tariff war, the International Monetary Fund has warned.
Delivering a sharp rebuke for Donald Trump, the Washington-based organisation said the current threats made by the US and its trading partners risked lowering global growth by as much as 0.5% by 2020, or about $430bn in lost GDP worldwide.
Although all economies would suffer from further escalation, the US would find itself “as the focus of global retaliation” with a relatively higher share of its exports taxed in global markets. “It is therefore especially vulnerable,” the fund said.
Trump raised the stakes in his mounting trade dispute with China last week by proposing 10% tariffs on $200bn of Chinese goods entering the country, on top of $34bn of tariffs that were officially imposed on Beijing at the beginning of the month. The Chinese government, which hit back at the first wave of US tariffs with similar measures, was quick to warn of further retaliation on Monday.
The US president also rattled European leaders by labelling the EU one of his greatest “foes” over trade, while leaving behind a trail of political chaos in Britain from his visit last week.
Issuing its latest World Economic Outlook report on Monday amid the rising tensions, the IMF said there were greater risks emerging for the global economy since its last assessment in the spring. Although world growth remains strong, the expansion is “becoming less even, and risks to the outlook are mounting”, it said.
Warning that the broad expansion for the world economy that began about two years ago has plateaued, Maurice Obstfeld, the IMF’s economic counsellor, said: “Countries must resist inward-looking thinking and remember that on a range of problems of common interest, multilateral cooperation is vital.”
Beyond the immediate threat from weaker levels of international trade, the IMF said greater use of protectionist measures could hinder business investment, disrupt global supply chains, slow the spread of productivity-boosting technologies and raise the price of consumer goods.
Despite highlighting greater risks for the world economy, the fund left its global growth forecast of 3.9% for both this year and next unchanged. However, it unveiled sharp slowdowns for the EU, UK and Japan amid weaker growth and increasing political tension.
Growth in the UK this year is forecast to slow to 1.4%, compared with an estimate of 1.6% made in April, as a consequence of weaker economic growth in the first quarter of 2018. The British economy ground to a halt in March amid freezing weather and heavy snowfall, although has since staged a modest rebound.
The fund also highlighted the risk attached to Westminster and Brussels failing to make further progress on the terms of Brexit, despite several months of negotiations between the two sides.
Germany, France and Italy were among European nations receiving the sharpest downgrades for growth this year, of as much as 0.3% compared with forecasts made in April, amid rising political risks in the single currency area triggered by the Italian election earlier this year. Growth across the eurozone this year is forecast to slow to 2.2%, compared with an earlier forecast for an expansion of 2.4%.
BBC with additional report from Guardian UK
