The International Monetary Fund will reduce its growth forecast for the world economy to 2019 from 3,2%, said IMF Managing Director Kristalina Georgieva on Tuesday.
Speaking ahead of an IMF annual meeting in Washington next week, Georgieva warned that "the global economy is now slowing down in sync" due to the trade dispute between the United States and China, the two largest economies in the world.
The IMF's World Economic Outlook report, scheduled for next week, "will show downward revisions for 2019 and 2020," she said. "At 2019, we expect slower growth in almost 90% of the world," said Georgieva, who took office on 1 in October.
The IMF reviews its global economic projections every three months. It will be the fifth consecutive time since October last year that the Washington-based organization will make a downward revision to 2019.
Georgieva noted that “there is a slowdown in economic activity” in advanced economies, including Japan, the United States, and the euro zone. The global economic growth forecast for 2020 will also be cut from the current 3,5%, she said.
"For the global economy, the cumulative effect of trade conflicts could mean a loss of about $ 700 billion to 2020, or about 0,8%" of the world's gross domestic product, she said, pointing to punitive tariffs that are or will be. implemented by the United States and China in their trade war, for which there is no end in sight. "Everyone loses in a trade war," she said.
Meanwhile, Georgieva highlighted the issue of growing corporate debt amid prolonged low interest rates.
She sounded the alarm, saying that “corporate debt at risk of default would rise to $ 19 trillion, or nearly 40% of total debt in eight major economies,” including Japan and the United States, if a major economic downturn occurs.
Source: Jiji Press