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03 October 2019
ECONOMY

IMF projects sharper world slowdown as trade tensions flare

The Washington-based fund cited trade uncertainty for cutting its outlook for 2019 global growth to 3.2 per cent in July 2019, the fourth downgrade since last October 2018.

DAVID LIPTON, THE IMF'S FIRST DEPUTY MANAGING DIRECTOR/BLOOMBERG


The International Monetary Fund's (IMF) First Deputy Managing Director said that the fund expects a more significant global slowdown than it did three months ago, adding it’s difficult to see an economic recovery if the trade uncertainty continues, reported Bloomberg.

David Lipton, the IMF's First Deputy Managing Director, said, “We see the global economy going through a gradual, synchronised slow down, unless the trade tensions are defused, it’s very hard to see mainstream macroeconomic tools countering the impact of escalating trade difficulties, so it’s very important that those be de-escalated.” 

 “The data that is come out since then leads us to expect some further slowdown,” added Lipton, who led the fund on an acting basis after Christine Lagarde stepped aside in July. Kristalina Georgieva took over as IMF managing director this week.

Lipton said that looser monetary policy by central banks has helped deliver an economic boost, noting that more fiscal stimulus may also be needed.

The Federal Reserve lowered interest rates by a quarter percentage point in July 2019 and again in September as the economy cooled, while the European Central Bank cut rates further below zero and restarted quantitative easing last month.

“It’s been important that central banks have stood ready to continue providing support, we believe that is been a material factor in stemming the slowdown in the global economy,” said Lipton.

Lipton said that it is important that fiscal policy stand ready if there is further slowdown to react where countries have policy space.

Still, policymakers in major economies must be vigilant to the dangers from an extended period of low-interest rates, added Lipton.


RELATED STORIES: GLOBAL SLOWDOWN US-CHINA TRADE TENSION IMF


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