New IMF Managing Directors Says “Coordinated Fiscal Stimulus May Be Required”
New IMF Managing Directors Says “Coordinated Fiscal Stimulus May Be Required” from SMM
SMM: trade tensions and Brexit uncertainty pose “serious risks” to a number of economic sectors, and global trade growth is close to stagnation, according to a speech by Christina Georgiyeva, the new managing director of the (IMF) of the International Monetary Fund (IMF) on Tuesday. At the same time, she pointed out that if there is a more serious slowdown in the economy, various governments will be required to co-ordinate fiscal stimulus measures. Affected by the Georgieva speech and uncertainty about Brexit, gold prices rallied 1500 on Tuesday, nearing a day high of $1510 an ounce.
Georgieva’s speech set the tone for next week’s IMF annual meeting. She said the IMF will lower its growth forecasts for 2019 and 2020 in its global economic outlook, released on Oct. 15. In July, the IMF cut its growth forecasts for this year and next to 3.2 per cent and 3.5 per cent, respectively, the fourth reduction since October.
Global institutions, economists and investors have blamed the international trade situation for the slowdown in global growth. The global economy is now slowing at the same time, with 90 per cent of global growth slowing, according to IMF estimates. By contrast, two years ago, 3/4 of the world’s sectors were growing at the same time.
In addition to trade, Georgieva said, Brexit and geopolitical tensions also created uncertainty, hampering economic potential. Not only that, the economic rift will “last for a generation” and may change, such as supply disruptions or trade isolation. There is a risk of relaxation and complacency. While economic growth is slowing, it has not stalled, which is not bad. But if we don’t act now, we may experience a bigger economic downturn. ”
A more serious slowdown will require more financial support. If the global economy slows more than expected, a coordinated fiscal response may be needed. The (OECD) revised its economic forecasts last month, while World Bank President David Malpass said on Monday that the bank was preparing to cut its growth forecast for June by 2.6 per cent.