The new head of the International Monetary Fund said the fallout of current trade battles could last a generation.
Kristalina Georgieva made the warning in her inaugural speech.
CGTN’s Owen Fairclough reports.
When your new job entails overseeing a global economy heading for danger, maybe there’s not much time for blue-sky thinking.
“We have spoken in the past about the dangers of trade disputes,” Georgieva told staff in her first public address. “Now, we see that they are actually taking a toll. Global trade growth has come to a near standstill.”
The second woman to run the IMF after Christine Lagarde left to head the European Central Bank, Georgieva grew up in Bulgaria during the Cold War…and sees familiar divisions now.
“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,” Georgieva said.
And the cost of these trade conflicts waged by the Trump administration has been priced beyond lower growth for individual countries.
Georgieva added: “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 GDP.”
The IMF says a major international coordinated stimulus will be needed should the world economy slows down more sharply than forecast.
That was last done by 10 years ago after the near-collapse of Wall Street almost brought down the entire global financial system.