'Global Economy in Synchronized Slowdown': IMF Chief Kristalina Georgieva

The IMF's new chief unveils data showing trade conflicts could wipe out $700 billion in global GDP by 2020

The IMF's new chief unveils data showing trade conflicts could wipe out $700 billion in global GDP by 2020

The new chief of the International Monetary Fund (IMF) says trade wars are threatening to undermine the global economy, likely bringing on the slowest growth in almost a decade. The research takes into account the US's planned tariffs on Chinese imports.

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

The IMF expects slower growth in almost 90% of the world this year.

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

The IMF boss said growth in 2019-2020 will fall to its lowest rate since the beginning of the decade due to widespread deceleration.

And even if growth resurges next year, some of the "rifts" already caused by the trade conflicts could cause "changes that last a generation", such as shifting supply chains, she said, AFP said.

Brexit, the U.S. -China trade war, and a wounded Europe.

"That means dealing with subsidies, as well as intellectual property rights and technology transfers", she said, adding that a modernized trading system would unlock the potential of services and e-commerce. "We are not there" but it's better to be too early than too late, she said.

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

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She also said that about 40 emerging markets and developing economies, including 19 in sub-Saharan Africa, will have real GDP growth rates above 5 per cent.

According to the October 2019 Monetary Policy Report of the RBI, the near-term approach of the Indian economy has fraught risks and the combination of domestic and global headwinds has depressed economic activities in the country, said the reports.

Previously, the world economy had been projected to expand by 3.2pc in 2019 and 3.5pc in 2020.

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

Despite this overall deceleration, close to 40 emerging market and developing economies are forecast to have real GDP growth rates above 5 per cent - including 19 in sub-Saharan Africa, the International Monetary Fund chief said.

"In some of the major emerging market economies, such as India and Brazil, the slowdown is even more pronounced this year", he added. "The global economy is now in a synchronized slowdown", Georgieva said in a speech ahead of IMF-World Bank annual meetings next week.

The lasting solution to the trade conflicts will require co-operation from all countries, Ms. Georgieva said.

She called on Germany, the Netherlands and South Korea to increase fiscal spending to support growth, but said such spending was not appropriate for all countries since public debt remained near record levels.

The Bulgarian-born official added a personal note to her speech: "When it comes to improving people's lives, hard work starts at home".

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