International Monetary Fund Managing Director Kristalina Georgieva on Tuesday warned of a risk of complacency among countries, and without action to resolve trade conflicts and support growth, global economic deceleration could turn into "a more massive slowdown". The research takes into account the US's planned tariffs on Chinese imports.
"If the trade conflict worsens and causes a slump in investor confidence, the effects on global growth and poverty could be significant - more than 30 million people could be pushed into poverty", the World Bank said in the report.
Fund expects slower growth in almost 90% of world in 2019.
"The global economy is now in a synchronized slowdown".
"Even when voice picks-up in 2020, the hot rifts would possibly per chance per chance well per chance effect in adjustments that final a technology - broken provide chains, siloed trade sectors, a "digital Berlin Wall" that forces worldwide locations to fabricate a resolution from technology techniques", the Bulgarian economist added who held the No.2 job on the World Bank.
U.S. President Donald Trump has taken a hard line on trade issues and has become involved in several tit-for-tat tariff moves - the most substantial of which is with China.
Within the middle of her speech, the Bulgarian economist, who succeeded Christine Lagarde, acknowledged that the trade tensions had "critically weakened" manufacturing and investment exercise worldwide. "Start by unleashing the growth generating capacity of trade", she said.
The only solution to the trade conflict that has emerged requires all the countries working together and cooperating, Georgieva said.More news: Brexit deal 'overwhelmingly unlikely,' UK source says Germany's Merkel told Britain
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Georgieva said that two years ago the world economy was in a period of "synchronized boom", since nearly 75% of the world was in a phase of acceleration.
The fund is due to release details in its updated World Economic Outlook on Oct 15.
Georgieva made this review a week sooner than the joint Annual Assembly between the International Monetary Fund and World Bank (WB) all over which both establishments will fresh their economic projections in a gathering of high central bankers and economic system ministers.
The IMF chief's statement came even as the Reserve Bank of India (RBI) said that the Indian economy which has largely been subdued in the past few quarters and signs of a slowdown have cropped up, is likely to face several more risks in the near term. The world economy now looks even weaker than the bank's June forecast for 2.6% growth in 2019, as it is "hurt by Brexit, Europe's recession and trade uncertainty". "Yet across advanced economies, including in the US, Japan, and especially the Euro area, there is a softening of economic activity", she said.
The economist said the main goal should now be to fix the fractures that have emerged and called for a coordinated global response. "This is above the levels seen during the financial crisis".
"The key is to improve the system, not abandon it", she said.
Germany, the Netherlands and South Korea should increase spending on infrastructure and research to boost demand and growth potential.