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
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
×