Effects of Economic Slowdown ‘More Pronounced’ in India: IMF Chief

Speaking about the Global economic slowdown, the IMF Chief said that India is one of the most affected economies.

IMF Chief Kristalina Georgieva.

(Photo: AP)

The new IMF chief Kristalina Georgieva while commenting on the global economic crisis on Tuesday, 8 October, said the global economy is facing a ‘synchronised slowdown’ and the effect is ‘more pronounced’ this year in some of the largest emerging market economies like India.

In her speech, the IMF chief said trade disputes are undermining the global economy.

Research shows the impact of the trade conflict is widespread and countries must be ready to respond in unison with cash infusions, Georgieva said in her first speech as the managing director of the International Monetary Fund. 

She also called for a ramp-up in carbon taxes to address the other challenge facing the global economy: the climate crisis.

“In 2019, we expect slower growth in nearly 90 percent of the world. The global economy is now in a synchronised slowdown,”

Kristalina Georgieva, IMF Chief

"This widespread deceleration means that growth this year will fall to its lowest rate since the beginning of the decade." She said the IMF is cutting its forecasts for growth this year and next. Previously, the world economy had been projected to expand by 3.2 percent in 2019 and 3.5 percent in 2020.

While trade tensions had been talked about as a danger to the economy, "now, we see that they are actually taking a toll," she said.

“For the global economy, the cumulative effect of trade conflicts could mean a loss of around USD 700 billion by 2020, or about 0.8 per cent of GDP, she said, which is far higher than the fund previously forecast as its worst case scenario.That is an amount “approximately the size of Switzerland’s entire economy,”

Kristalina Georgieva, IMF Chief

“President Donald Trump's trade war with China involves steep tariffs on hundreds of billions of dollars in two-way commerce but there are conflicts with other trading partners as well,” she added.

In her speech, ahead of the IMF-World Bank autumn meetings, Georgieva said slower growth is expected this year in nearly 90 percent of the world’s economies.

"The results are clear. Everyone loses in a trade war," she added.

(With Inputs from AFP)