The global economy is set for its weakest growth since 1990, warned the International Monetary Fund (IMF) Chief, Kristalina Georgieva. She emphasized that the slowdown is primarily due to the trade tensions and uncertainty created by the US-China trade war, Brexit, and geopolitical risks.
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| International Monetary Fund (IMF) Managing Director Kristalina Georgieva attends a news conference following a meeting at the Federal Chancellery in Berlin, Germany November 29, 2022. File photo: Reuters/Michele Tantussi |
In her statement at the IMF and World Bank Annual Meeting in Washington DC, Georgieva said, "We are now in a synchronized slowdown, and the outlook is particularly concerning for countries that rely on trade and manufacturing."
The IMF revised its forecast for global growth down to 3% for this year and 3.4% for 2020, which is the slowest rate since the financial crisis of 2008-09. The organization also downgraded its projection for growth in developed economies, including the US, the Eurozone, and Japan.
The US-China trade war has already caused disruptions in global supply chains and manufacturing, affecting business investment and consumer confidence. The IMF chief highlighted that the world's two largest economies, which account for more than 40% of global GDP, must resolve their differences through dialogue and cooperation.
Georgieva also warned of the risks posed by Brexit and the political unrest in Hong Kong. The uncertainty surrounding the UK's departure from the European Union has already had a significant impact on the British economy and could also harm Europe's growth prospects.
Moreover, the ongoing protests in Hong Kong have created a challenging situation for businesses and investors, as well as geopolitical risks for the region. The IMF chief urged all parties involved to find a peaceful solution to the crisis.
Georgieva also emphasized the need for countries to work together to address climate change, which she said was a significant threat to the global economy. She called for greater investment in clean energy, carbon pricing, and the phasing out of fossil fuel subsidies.
The IMF chief called on governments to take action to boost growth, including increased investment in infrastructure, education, and healthcare. She also urged policymakers to implement structural reforms to improve productivity and promote inclusive growth.
Georgieva's warning comes as the global economy is already showing signs of weakness. The Eurozone's growth rate slowed to just 0.2% in the second quarter of this year, while Germany, Europe's largest economy, contracted by 0.1% in the same period. The US economy also showed signs of slowing, with growth in the second quarter falling to 2.1%, down from 3.1% in the first quarter.
The IMF's warning is likely to put pressure on policymakers to take action to boost growth and avoid a global recession. However, with the US-China trade war showing no signs of abating and Brexit still unresolved, the outlook for the global economy remains uncertain.
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