The global economy will lose about $700 bln or about 0.8% of world GDP by 2020 due to global trade conflicts, while the growth of world trade has nearly stopped, IMF Managing Director Kristalina Georgieva said on Tuesday.
The cumulative effect of trade conflicts could mean a $700 billion reduction in global gross domestic product (GDP) output by 2020, or around 0.8%.
Policy priorities, she said, include using monetary policy wisely and enhancing financial stability, deploying fiscal tools to meet current challenges, implementing structural reforms for future growth, and embracing global cooperation. "The global economy is now in a synchronised slowdown".
The IMF Managing Director said that global growth could fall to its lowest this decade as part of the slowdown, adding that the agency's outlook, due next week, will cut growth estimates for both 2019 and 2020.More news: Tusk to Johnson: Brexit not 'stupid blame game'
Beyond the immediate costs, she said, the "rifts" could cause disruptions that "last a generation".
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.
Throughout her speech, the Bulgarian economist, who succeeded Christine Lagarde, mentioned that the commerce tensions had "substantially weakened" manufacturing and funding exercise worldwide. "We must act", she said.
The new International Monetary Fund head said that trade disputes have now affecting multiple countries, as are other critical situations like Brexit.More news: 800,000 Californians may have power cut to help prevent wildfires
Georgieva compared the present scenario to that of two years ago, before the US-China trade war, when countries representing almost 75 per cent of the world's output were seeing accelerating growth.
While trade tensions had been talked about as a danger to the economy, "now, we see that they are actually taking a toll", she said. Brexit was named as one of the factors slowing down the world economy.
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. "Now is the time for countries with a margin in their budgets to make use of their fiscal capacity or prepare to do so", he said.
"In some of the largest emerging market economies, such as India and Brazil, the slowdown is even more pronounced this year". Georgieva then told the minister that Argentina was at the top of the IMF's priorities and that they would work together to understand the country's economic and political difficulties.More news: Spotify Introduces New Siri Support And Apple TV Support
While some governments are burdened by high debt levels, "in places such as Germany, the Netherlands, and South Korea, an increase in spending-especially in infrastructure and R&D-will help boost demand and growth potential", she said.