Bulgaria’s Kristalina Georgieva, IMF’s new managing director, and first leader from an emerging market, October 1, 2019. (Photo: AFP)
Washington (People’s Daily) – The new Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva, warned Tuesday the economy is in the grips of a "synchronized global slowdown" that will see 90 percent slower worldwide growth for 2019.
In her first public statement as the new IMF head, Georgieva said an updated forecast to be released October 15 will illustrate growth falling to its lowest point in nearly a decade.
Georgieva cited the ongoing trade conflict as the primary cause for the significant drop while stressing that countries must be ready to respond in unison with cash infusions.
Other reasons cited include trade, Brexit, and geopolitical tensions, which have played a role in preventing the global economy from reaching its full potential.
"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," Georgieva said.
"Global trade growth has come to a near standstill," she said, adding, "everyone loses in a trade war.” The cumulative trade conflict effects of trade conflicts could bring losses of around $700 billion by 2020, or about 0.8 percent of GDP.
“As a reference, this is approximately the size of Switzerland’s entire economy,” she said, and much higher than earlier forecast.
The lasting solution to the trade conflicts will require cooperation from all countries, she added.
"The key is to improve the system, not abandon it," Georgieva stressed. She called for “synchronized policy action” and urged countries to use monetary policy wisely and enhance financial stability, deploy fiscal tools to meet challenges and implement structural reforms for future growth, and embrace international cooperation.