Beautiful Virgin Islands

Saturday, Jul 05, 2025

IMF: Trade tensions hurting global economy

IMF: Trade tensions hurting global economy

Kristalina Georgieva exuded conviction and humor as she delivered her inaugural speech as International Monetary fund managing director on Tuesday, sending a blunt warning that trade tensions are taking a toll on the global economy, which calls for a lasting solution.

Growth will fall to its lowest rate since the beginning of the decade, says IMF

Trade tensions are taking a toll on the global economy and a lasting solution is necessary, Kristalina Georgieva, managing director of the International Monetary Fund said on Tuesday.

Georgieva, who this month took the IMF helm from Christine Lagarde, said the global economy is now in a "synchronized slowdown", and global trade growth has come to a near standstill, with trade disputes and the ensuing uncertainty and Brexit continuing to hold back economic potential.

"This widespread deceleration means that growth this year will fall to its lowest rate since the beginning of the decade," Georgieva said in her speech "Decelerating Growth Calls for Accelerating Action".

Showing a graphic of projected global GDP loss from the lengthy trade conflict between the United States and China, Georgieva said the cumulative effect of trade conflicts could mean a loss of around $700 billion by 2020, or about 0.8 percent of the GDP.

The indirect effects of the trade war, including the loss of confidence and productivity and market reactions-are far greater than the direct economic impact of the tariffs, Georgieva said.

The 66-year-old Bulgarian economist turned to the packed audience and asked if there was anyone from Switzerland.

"Well, maybe it's right that there is nobody from Switzerland because in this scenario the whole economy of Switzerland disappears," she said, referring to the estimation that the global GDP loss would be close to the size of Switzerland's entire economy.

Shan Weijian, group chairman and CEO of PAG, a Hong Kongbased private equity firm, said the trade dispute, if it continues, will compromise the international trading system, which relies on a global division of labor based on each country's comparative advantage. "Once that system becomes less dependable-when disrupted, for instance, by the boycotts and hostility of trade wars-countries will start decoupling from one another," he said in a recent article.

Noting that China and the US are "joined at the hip" economically, Shan said any attempt to decouple the two economies will bring catastrophic consequences for both, and for the world at large.

Noting the Bulgarian Ambassador to the US Tihomir Stoytchev was among the audience, Georgieva said, "I'm going to use a Bulgarian proverb: We are in the position that we can take a horse to water-by showing the evidence peace is better than war-but we cannot make the horse drink-that has to go into national self-interest and decision-making."

She said countries need to address legitimate concerns related to their trade practices and also to "improve, not abandon" a more modern global trading system, particularly to unlock the full potential of services and e-commerce.

Quoting a quip that the IMF stands for "It's Mostly Fiscal", Georgieva urged countries to deploy-or get ready to deploy-fiscal firepower, including an increase in spending especially in infrastructure and research and development in developed countries, which will help boost demand and growth potential.

The new IMF chief also urged countries to act quickly to implement structural reforms, which as IMF research has found, could raise productivity and generate enormous economic gains.

"Potential job losses from automation and shifting demographics require countries to reform the structure of their economies," she said. "If we do not act, many countries will be stuck in mediocre growth."

She borrowed a proverb from Vietnam, the home country of a young IMF colleague who "sadly passed away" last year to highlight the urgency of action: "The time to jump is before your feet get wet."

She also called for countries to embrace international cooperation, from safely adapting to fintech, to fully implementing the financial regulatory reform agenda, to fighting money laundering and the financing of terrorism, and addressing climate change.

"We are, in the IMF, committed to assist countries to reduce carbon emissions and become more climate-resilient and we recognize that at the current average carbon price of $2 per metric ton, most people and most companies have very little financial incentives to make this transition," she said.

Limiting global warming to a safe level requires a significantly higher carbon price, and taxing carbon is a laudable strategy, according to Georgieva.

"My professor of statistics loved to say about averages: 'You put your head in the refrigerator, you put your feet in the oven, your temperature is average, but you're dead,'" Georgieva said.

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
Poland Implements Border Checks Amid Growing Migration Tensions
Political Dispute Escalates Between Trump and Musk
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
US Senate Votes to Remove AI Regulation Moratorium from Domestic Policy Bill
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
Jury Deliberations in Diddy Trial Yield Partial Verdict in Serious Criminal Charges
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
King Charles Plans Significant Role for Prince Harry in Coronation
Two Chinese Nationals Arrested for Espionage Activities Against U.S. Navy
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
Trump Administration Considers Withdrawal of Funding for Hospitals Providing Gender Treatment to Minors
Texas Enacts Law Allowing Gold and Silver Transactions
China Unveils Miniature Insect-Like Surveillance Drone
×