Ndubuisi Francis in Abuja with agency report
The International Monetary Fund (IMF) yesterday issued a stark warning about the state of the global growth, saying trade conflicts had thrown it into a “synchronised slowdown” and must be resolved.
The Fund’s new Managing Director, Kristalina Georgieva, in her curtain-raiser speech previewing the key issues to be addressed in the IMF/World Bank Annual Meetings in Washington DC, next week after taking over the global crisis lender on October 1, unveiled a new IMF research showing that the cumulative effect of trade conflicts could mean a $700 billion reduction in global GDP output by 2020, or around 0.8 per cent.
The research takes into account US President Donald Trump’s announced and planned tariff increases on remaining Chinese imports, or around $300 billion worth of goods.
Much of the GDP losses will come from a decline of business confidence and negative market reactions, she said.
“In 2019, we expect slower growth in nearly 90 per cent of the world. The global economy is now in a synchronized slowdown. This means that growth this year will fall to its lowest rate since the beginning of the decade,” Georgieva said.
The Bulgarian economist, a former European Union official who previously held the number two job at the World Bank Group, said that trade had “come to a near standstill.”
She warned that fractures in trade could lead to changes that last a generation, including “broken supply chains, siloed trade sectors, a ‘digital Berlin Wall’ that forces countries to choose between technology systems.’”
In calling for countries to work together to revise global trade rules to make them sustainable, she referenced frequent complaints about China’s trade practices, without specifically naming the country.
“That means dealing with subsidies, as well as intellectual property rights and technology transfers,” she said, adding that a modernised trading system would unlock the potential of services and e-commerce.