The global economy is experiencing ‘synchronizing slowdown’, effects are ‘more pronounced’ in India, says IMF head.
Washington| On Tuesday IMF Managing Director Kristalina Georgieva said, The global economy is witnessing ‘synchronizing slowdown’, the effect will be more pronounced in some of the largest emerging economies like India.
The IMF updated forecast is going to released next week will show growth falling to its lowest point since the beginning of the decade.
Georgieva said, “Two years ago, the global economy was in a synchronized upswing. Measured by GDP, nearly 75 per cent of the world was accelerating. The global economy is now in a synchronized slowdown. In 2019, we expect slower growth in nearly 90 per cent of the world”.
She blamed much of the slowdown on the trade conflicts which can cause a loss of around $700 billion in output by the end of the next year of 0.8% of world GDP.
“Every one loss in a trade war,” she said. She urged all nations to pull back from the escalating trade war especially the US and China as the world’s most strong economies.
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She explained, “In the United States and Germany, unemployment is at historic lows. Yet across advanced economies, including in the US, Japan, and especially the Euro area, there is a softening of economic activity. In some of the largest emerging market economies, such as India and Brazil, the slowdown is even more pronounced this year”.
The IMF had cut its projection for India’s economic growth by 0.3 percentage points to 7 per cent for the fiscal year 2019-20 owing to the “weaker-than-expected outlook” for the domestic demand.
“Even if growth picks up in 2020, the current rifts could lead to changes that last a generation broken supply chains, siloed trade sectors, a “digital Berlin Wall” that forces countries to choose between technology systems,” she said.
The lasting solution to the trade conflicts will require cooperation from all countries, Georgieva said.