New IMF chief claims the world economy is in a "synchronized slowdown"

IMF leader Kristalina Georgieva gives a presentation on 8 October 2019

Grinding trade disputes are undermining the global economy, which is set to see its slowest growth in almost a decade, the newly-installed International Monetary Fund chief said Tuesday. For the global economy, the cumulative effect of trade conflicts could mean a loss of about US$ 700 billion by 2020, about 0.8% of GDP", he said, urging world leaders: "We must work together now and find a lasting solution to trade.

"Global trade voice has arrive to a advance standstill", she warned.

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

David Malpass became president of the World Bank in April, and in June his organization predicted the global economy would grow 2.6% in 2019, the slowest rate in three years.

The IMF Managing Director said that global growth could fall to its lowest this decade as part of the slowdown, adding that the agency's outlook, due next week, will cut growth estimates for both 2019 and 2020.

Georgieva took over from Christine Lagarde as the organisation's head earlier this month.

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.

"There is a serious risk that services and consumption could soon be affected", she said.

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"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.

"Trade uncertainty is an important factor in the slowdown", Mr. Malpass said in an interview with The Wall Street Journal, but "growth could accelerate if the nontrade aspects of this were improved".

However, she 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.

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 precarious outlook will affect many countries caught in the crossfire of trade conflicts, including struggling emerging markets with International Monetary Fund programmes, she added. Brexit was named as one of the factors slowing down the world economy. "Yet across advanced economies, including in the US, Japan, and especially the Euro area, there is a softening of economic activity", Georgieva added.

The IMF chief warned that the World Economic Outlook for 2019 and 2020 reflects a complex situation compared to the previous figures presented in July in Chile.

In her first speech after taking charge, Georgieva said the global economy is in the midst of a "synchronized slowdown", effects of which have particularly been felt in countries such as India.

Germany, the Netherlands and South Korea should increase spending on infrastructure and research to boost demand and growth potential.

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