Trade conflicts fuel synchronized global slowdown

Kristalina Georgieva said it is a crisis where no one is immune and everyone has a responsibility to act

"The global economy is now in a synchronized slowdown", she said, noting that the fund estimates that 90 per cent of of the world is seeing slower growth.

The IMF's projection includes President Donald Trump's planned tariff hike on another $US300 billion worth of Chinese imports.

Much of the GDP losses will come from a decline of business confidence, productivity losses from broken supply chains and negative market reactions, she said.

In her speech, ahead of the IMF-World Bank autumn meetings next week, Georgieva said slower growth is expected this year in almost 90% of world economies.

"The global economy is now in a synchronized slowdown".

The Managing Director of Worldwide Financial Fund (IMF) identified that the widespread deceleration signifies that progress this 12 months will fall to its lowest price because the starting of the last decade.

"As a reference, this is approximately the size of Switzerland's entire economy", said the Bulgarian economist, who succeeded France's Christine Lagarde and took office on October 1.

"Even if growth picks-up in 2020, the current rifts could lead to changes that last a generation - broken supply chains, siloed trade sectors, a "digital Berlin Wall" that forces countries to choose between technology systems", the International Monetary Fund head added.

The comments came as U.S. stocks experienced a sharp sell-off on Tuesday following escalating tensions between the USA and China.

"There is also in my view a risk of complacency", she said in an on-stage conversation with Bloomberg's Tom Keene in Washington following her speech.

"In a trade war, everyone loses".

Georgieva said that two years ago the world economy was in a period of "synchronized boom", since nearly 75% of the world was in a phase of acceleration. Yet across advanced economies, including in the US, Japan and especially the euro area, there is a softening of economic activity, Georgieva said.

The economist said the main goal should now be to fix the fractures that have emerged and called for a coordinated global response. The global economy is now in a synchronised slowdown.

Per the October 2019 Monetary Policy File of the RBI, the advance-term arrive of the Indian economic system has fraught risks and the aggregate of home and world headwinds has sorrowful economic activities in the nation, acknowledged the reports. Brexit was named as one of the factors slowing down the world economy.

The precarious outlook will affect many countries caught in the crossfire of trade conflicts, including struggling emerging markets with International Monetary Fund programmes, she added. "This is above the levels seen during the financial crisis".

She urged countries like Germany, South Korea and the Netherlands to boost spending to stimulate growth.



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