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The global economy is going through a "synchronised slowdown" — IMF's Managing Director

The global economy is going through a

The effects of trade conflicts would lead to a loss of around $700 billion or 0.8% reduction in GDP output by 2020. The global economy is now in a synchronized slowdown.

Fund expects slower growth in almost 90% of world in 2019.

Georgieva, a Bulgarian economist and sociologist who formally replaced Christine Lagarde on October 1, delivered her message days before the IMF's annual meeting, which begins next week in Washington, where finance ministers and central bank presidents from around the world, including Hernán Lacunza and Guido Sandleris, will meet.

The IMF boss said growth in 2019-2020 will fall to its lowest rate since the beginning of the decade due to widespread deceleration. "The world economy is still growing, it is just growing too slowly". But throughout superior economies, together with within the US, Japan and particularly the euro space, there's a softening of financial exercise, she stated.

She said trade tensions could result in "substantial weakening" of manufacturing and investment activity, and could subsequently affect services and consumption. For comparison, this is the approximate annual GDP of Switzerland.

"Uncertainty - driven by trade but also by Brexit, and geopolitical tensions - is holding back economic potential", Georgieva said. Of course it's hard, but we must think what would happen if the Fund were not there, what would be the devastation of a completely ruined economy, with no hope of being rebuilt.

"We are already shooting ourselves in the foot".

The research takes into account US President Donald Trump's announced and planned tariff increases on remaining Chinese imports, or around US$300 billion worth of goods.

The new International Monetary Fund head said that trade disputes have now affecting multiple countries, as are other critical situations like Brexit.

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

For her part, Ms. Georgieva singled out three countries - Germany, the Netherlands and South Korea - as places that could benefit from increasing government spending. "In fact, low interest rates may give some policymakers additional money to spend", she stated.

A major downturn could put $19 trillion in corporate debt at risk of default - 40% of the total in 8 major economies. That includes resolving legitimate concerns over protection of proprietary technology, an issue at the center of Washington's dispute with Beijing. The key, she said, is to recognize that "inequalities are a drag on multilateralism and drag on growth".

New research at the International Monetary Fund confirms that carbon taxes can be one of the most powerful and efficient tools, Georgieva said. Limiting global warming to a safe level requires a significantly higher carbon price, she added.

At the current average carbon price of United States dollars 2 per ton, most people and most companies have little financial incentive to make this transition.



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