Effects Of Global Economic Slowdown "More Pronounced" In India

Newly-installed International Monetary Fund Managing Director Kristalina Georgieva warns that the trade wars are having lasting impact on the global economy

Newly-installed International Monetary Fund Managing Director Kristalina Georgieva warns that the trade wars are having lasting impact on the global economy

The plan will be shelved due to stiff resistance from the United States, the official said on Tuesday, speaking on condition of anonymity as he was not authorised to talk to the media. The global economy is now in a synchronized slowdown.

"Global trade growth has come to a near standstill", she said.

In her first speech, Georgieva referred to new research by the International Monetary Fund that will be unveiled during the International Monetary Fund and World Bank annual meetings next week.

President Donald Trump has insisted that the US economy has not been affected by the higher tariffs he has imposed on China and other nations, which have triggered retaliatory tariffs on USA goods.

"In 2019, we expect slower growth in almost 90 per cent of the world", Georgieva said during her speech on Tuesday.

"This widespread deceleration means that growth this year will fall to its lowest rate since the beginning of the decade", the Bulgarian economist, who takes over from Christine Lagarde who will become the president of the European Central Bank, explained.

The situation is a stark contrast from two years ago, before the U.S. Measured by GDP, almost 75 per cent of the world was accelerating. Not only that, but the economic rifts could "last a generation" with possible shifts such as broken supply changes and siloed trade.

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The lasting solution to the trade conflicts will require co-operation from all countries, Georgieva said.

"That means dealing with subsidies, as well as intellectual property rights and technology transfers", she said, adding that a modernized trading system would unlock the potential of services and e-commerce.

The adverse impacts of the trade battles were already being felt, Georgieva said.

"We are decelerating, we are not stopping, and it's not that bad. In some of the largest emerging market economies, such as India and Brazil, the slowdown is even more pronounced this year", Georgieva said.

"The global economy is now in a synchronised slowdown", said Kristalina Georgieva, according to a transcript of the speech.

Georgieva called for central banks around the world to maintain low rates where appropriate, but warned that this could prompt excessive credit growth and risky investments in the search for better yields, leading to increased financial vulnerabilities. "If the global economy slows more sharply than expected, a coordinated fiscal response may be needed", she said.

The fund, hoping to boost its ability to respond to financial crises, has set a goal to decide by this autumn whether to increase funding, as well as how much to raise quotas and the proportion of each member's contribution.

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