Jiji Press -The Japan News
WASHINGTON (Jiji Press) — The International Monetary Fund will lower its growth projection for the world economy for 2019 from 3.2 percent, new IMF Managing Director Kristalina Georgieva said Tuesday.
In a speech delivered before an annual meeting of the IMF in Washington next week, Georgieva warned that the “global economy is now in a synchronized slowdown,” due to the trade spat between the United States and China, the world’s two biggest economies.
The IMF’s World Economic Outlook report, due out next week, “will show downward revisions for 2019 and 2020,” she said. “In 2019, we expect slower growth in nearly 90 percent of the world,” said Georgieva, who assumed the post on Oct. 1.
The IMF revises its world economic projections every three months. It will be the fifth time in a row since October last year for the Washington-based organization to make a downward revision for 2019.
Georgieva noted that “there is a softening of economic activity” in advanced economies, including Japan, the United States and the eurozone. The growth projection for the global economy for 2020 will also be cut, from the current 3.5 percent, she said.
“For the global economy, the cumulative effect of trade conflicts could mean a loss of around $700 billion by 2020, or about 0.8 percent” of the world’s gross domestic product, she said, pointing to the punitive tariffs that are or will be implemented by the United States and China in their trade war, for which no end is in sight. “Everyone loses in a trade war,” she said.
Meanwhile, Georgieva highlighted the issue of ballooning debts at companies amid prolonged low interest rates.
She sounded the alarm, saying that “corporate debt at risk of default would rise to $19 trillion, or nearly 40 percent of the total debt in eight major economies,” including Japan and the United States, if a major economic downturn occurs.Speech