Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

IMF: Trade tensions hurting global economy

IMF: Trade tensions hurting global economy

Kristalina Georgieva exuded conviction and humor as she delivered her inaugural speech as International Monetary fund managing director on Tuesday, sending a blunt warning that trade tensions are taking a toll on the global economy, which calls for a lasting solution.

Growth will fall to its lowest rate since the beginning of the decade, says IMF

Trade tensions are taking a toll on the global economy and a lasting solution is necessary, Kristalina Georgieva, managing director of the International Monetary Fund said on Tuesday.

Georgieva, who this month took the IMF helm from Christine Lagarde, said the global economy is now in a "synchronized slowdown", and global trade growth has come to a near standstill, with trade disputes and the ensuing uncertainty and Brexit continuing to hold back economic potential.

"This widespread deceleration means that growth this year will fall to its lowest rate since the beginning of the decade," Georgieva said in her speech "Decelerating Growth Calls for Accelerating Action".

Showing a graphic of projected global GDP loss from the lengthy trade conflict between the United States and China, Georgieva said the cumulative effect of trade conflicts could mean a loss of around $700 billion by 2020, or about 0.8 percent of the GDP.

The indirect effects of the trade war, including the loss of confidence and productivity and market reactions-are far greater than the direct economic impact of the tariffs, Georgieva said.

The 66-year-old Bulgarian economist turned to the packed audience and asked if there was anyone from Switzerland.

"Well, maybe it's right that there is nobody from Switzerland because in this scenario the whole economy of Switzerland disappears," she said, referring to the estimation that the global GDP loss would be close to the size of Switzerland's entire economy.

Shan Weijian, group chairman and CEO of PAG, a Hong Kongbased private equity firm, said the trade dispute, if it continues, will compromise the international trading system, which relies on a global division of labor based on each country's comparative advantage. "Once that system becomes less dependable-when disrupted, for instance, by the boycotts and hostility of trade wars-countries will start decoupling from one another," he said in a recent article.

Noting that China and the US are "joined at the hip" economically, Shan said any attempt to decouple the two economies will bring catastrophic consequences for both, and for the world at large.

Noting the Bulgarian Ambassador to the US Tihomir Stoytchev was among the audience, Georgieva said, "I'm going to use a Bulgarian proverb: We are in the position that we can take a horse to water-by showing the evidence peace is better than war-but we cannot make the horse drink-that has to go into national self-interest and decision-making."

She said countries need to address legitimate concerns related to their trade practices and also to "improve, not abandon" a more modern global trading system, particularly to unlock the full potential of services and e-commerce.

Quoting a quip that the IMF stands for "It's Mostly Fiscal", Georgieva urged countries to deploy-or get ready to deploy-fiscal firepower, including an increase in spending especially in infrastructure and research and development in developed countries, which will help boost demand and growth potential.

The new IMF chief also urged countries to act quickly to implement structural reforms, which as IMF research has found, could raise productivity and generate enormous economic gains.

"Potential job losses from automation and shifting demographics require countries to reform the structure of their economies," she said. "If we do not act, many countries will be stuck in mediocre growth."

She borrowed a proverb from Vietnam, the home country of a young IMF colleague who "sadly passed away" last year to highlight the urgency of action: "The time to jump is before your feet get wet."

She also called for countries to embrace international cooperation, from safely adapting to fintech, to fully implementing the financial regulatory reform agenda, to fighting money laundering and the financing of terrorism, and addressing climate change.

"We are, in the IMF, committed to assist countries to reduce carbon emissions and become more climate-resilient and we recognize that at the current average carbon price of $2 per metric ton, most people and most companies have very little financial incentives to make this transition," she said.

Limiting global warming to a safe level requires a significantly higher carbon price, and taxing carbon is a laudable strategy, according to Georgieva.

"My professor of statistics loved to say about averages: 'You put your head in the refrigerator, you put your feet in the oven, your temperature is average, but you're dead,'" Georgieva said.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
The Personality Rights Challenge in India’s AI Era
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Study Finds No Safe Level of Alcohol for Dementia Risk
Trump Says Ukraine Can Fully Restore Borders with NATO Backing
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Germany Weighs Excluding France from Key European Fighter Jet Programme
Cyberattack Disrupts Check-in and Boarding Systems at Major European Airports
Björn Borg Breaks Silence: Memoir Reveals Addiction, Shame and Cancer Battle
When Extremism Hijacks Idealism: How the Baader-Meinhof Gang Emerged and Fell
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
Trump Orders $100,000 Fee on H-1B Visas and Launches ‘Gold Card’ Immigration Pathway
France’s Looming Budget Crisis and Political Fracture Raise Fears of Becoming Europe’s “Sick Man”
Three Russian MiG-31 Jets Breach Estonian Airspace in ‘Unprecedentedly Brazen’ NATO Incident
European manufacturers against ban on polluting cars: "The industry may collapse"
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
U.S. and China Agree on Framework to Shift TikTok to American Ownership
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
×