New IMF Chief Warns of 'Synchronized Slowdown'

Chris Gaetano
Published Date:
Oct 9, 2019

International Monetary Fund Managing Director Kristalina Georgieva, who took over the institution at the beginning of this month, warned that the global economy is in a state of "synchronized slowdown," at least partially due to trade turmoil from the United States, according to Reuters. The new chief, who made her point during her opening speech, said that slowing manufacturing and investment activity worldwide could mean a $700 billion reduction in global gross domestic product (GDP) output by 2020, or around 0.8 percent. This loss, she said, would be bigger than the entire economy of Switzerland. Overall, she said, the IMF is seeing slower growth in 90 percent of the world. 

She said that a lot of this loss comes from a decline in business confidence, productivity losses from broken supply chains, and negative market reactions to world news; trade disruption from the White House, she said, has contributed to all three. 

World Bank Group President David Malpass, in a recent speech of his own, made a similar point, saying that global growth is slowing down. He noted that in June, the World Bank estimated that the global economy would grow at a sluggish 2.6 percent rate, the slowest pace in three years, and now that we're in October, its projections are even weaker. He too named trade uncertainty as a factor, but added in Brexit, and the proliferation of zero-to-negative yield bonds as other causes for worry. 

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