The IMF sees the global economy slowing to its slowest pace since the global financial crisis of 2008, the Fund’s chief economist Gita Gopinath says ahead of the launch of the World Economic Outlook Tuesday (October 15) in Washington.
“So, the global economy is in a synchronized slowdown and we are downgrading growth once again for 2019 to 3 percent, which is the slowest pace since the global financial crisis. Now we project a modest recovery in 2020 to 3.4 percent. However, that remains precarious,” said Gopinath, the first woman to hold the position of chief economist at the IMF.
Ongoing trade conflict and geopolitical tensions are at the heart of lowering the outlook, which remains precarious she said.
“The major downside risk to the outlook is heightened trade tensions and geopolitical tensions. This could derail an already fragile recovery that we’re projecting for emerging markets and developing economies, including the euro area.”
While growth is slowing, there are ways that policymakers can shore up growth in the medium term and reduce the risk of further damage, Gopinath said.
“So to rejuvenate growth policymakers should unwind the trade barriers and reduce geopolitical tensions. Monetary policy should remain accommodative, but it cannot be the only game in town. Fiscal policy also should play a role especially in countries that have fiscal space.”