Nations ‘must unite now to counter global slowdown’
New IMF chief Kristalina Georgieva delivers a sharp warning about protectionist trade practices
Nations must end protectionist trade conflicts and unify to stop the “synchronised slowdown” of the global economy, warned the new head of the International Monetary Fund (IMF), Kristalina Georgieva, during her inaugural speech on Tuesday.
Speaking in Washington, the Bulgarian economist, managing director of the IMF since 1 October, said: “In 2019, we expect slower growth in nearly 90% of the world. The global economy is now in a synchronised slowdown. This means that growth this year will fall to its lowest rate since the beginning of the decade.”
“We are decelerating, we are not stopping, and it’s not that bad. And yet, unless we act now, we are risking a potential more massive slowdown,” she said.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
However, “while the need for international cooperation is going up, the will to engage is going down”, she warned, adding that the disintegration of established global structures could last a generation, leading to “broken supply chains, siloed trade sectors, a ‘digital Berlin Wall’ that forces countries to choose between technology systems.’”
–––––––––––––––––––––––––––––––For a round-up of the most important business stories and tips for the week’s best shares - try The Week magazine. Get your first six issues free–––––––––––––––––––––––––––––––
Georgieva also addressed the impact of the US’s trade war with China, which she said could cost the global economy around $700 billion by 2020 .
“In this scenario, the whole economy of Switzerland disappears,” she added, previewing new Fund research to be unveiled during IMF and World Bank annual meetings next week.
“The warning comes at a potential turning point in the trade conflict between the world’s two largest economies,” reports The New York Times. “American and Chinese negotiators are meeting in Washington this week to try to resolve a trade war that has begun to inflict economic pain in both countries.”
The IMF chief also spoke about the perils of Brexit. “It is very obvious that this [Brexit] is going to be painful,” she told the BBC, saying UK politicians will have to work out how to protect people from its worst side effects. “The choices are not that many - you either borrow or you look at the [tax] increase,” she said.
Georgieva advised central banks to keep interest rates low as a form of stimulus “where appropriate”, but also warned that chronically low interest rates could produce similar conditions which led to the 2008 crash.
The Telegraph says “financial vulnerabilities are building as pension funds and insurers take on riskier investments to boost their returns, and companies pile on cheap debt for acquisitions instead of investing”.
Georgieva said the increase in risk-taking meant that if a major downturn occurs, corporate debt at risk of default would rise to $19 trillion, or nearly 40 percent of the total debt in eight major economies. This is above the levels seen during the financial crisis”.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
William Gritten is a London-born, New York-based strategist and writer focusing on politics and international affairs.
-
Kelly Cates to present Match of the Day
Speed Read Sky Sports presenter to take over from Gary Lineker at start of next season
By Elizabeth Carr-Ellis, The Week UK Published
-
Eclipses 'on demand' mark a new era in solar physics
Under the radar The European Space Agency's Proba-3 mission gives scientists the ability to study one of the solar system's most compelling phenomena
By Rafi Schwartz, The Week US Published
-
Crossword: December 16, 2024
The Week's daily crossword
By The Week Staff Published
-
The World Bank and the IMF: still fit for purpose?
In the Spotlight Washington meeting has renewed focus on whether 80-year-old Bretton Woods 'twin' institutions are able to tackle the challenges of the future
By The Week UK Published
-
Kenya unrest: a warning for Africa's future?
Today's Big Question Youth-led anger over unemployment, debt and corruption reflects tensions simmering across the continent
By Elliott Goat, The Week UK Published
-
How the world economy learned to live with the drama
Under the Radar As economists predict a 'soft landing' after recent crises, is the global economy now 'oblivious to the new world disorder'?
By Elliott Goat, The Week UK Published
-
Has life in Russia regressed since the Ukraine invasion?
Today's big question The 'war economy' has defied Western sanctions as ordinary citizens rally round the regime
By Elliott Goat, The Week UK Published
-
The great lending game: IMF vs China
feature Vulnerable countries face choice of restrictive ‘conditionalities’ or ‘debt-trap diplomacy’
By Elliott Goat Published
-
IMF: British economy ‘to grow faster than eurozone’
Speed Read Washington-based institution has revised its growth forecasts
By The Week Staff Published
-
China’s economic growth at three-decade low
Speed Read Beijing is expected to introduce new stimulus measures
By The Week Staff Published
-
Will US-China trade truce hold?
Speed Read Experts and markets deliver mixed reaction to outline ending 18-month superpower stand-off
By The Week Staff Last updated