Don’t expect any good news next week when the IMF holds its annual meeting and releases its latest World Economic Outlook report due on October 15.
According to the IMF’s new head, Bulgarian Kristalina Georgieva, the monetary fund will again cut its growth forecast for both 2019 and 2020; as a reminder back in July, the IMF again cut its projection for 2019 GDP growth to 3.2% this year and 3.5% next year, its fourth downgrade since last October, and the lowest since the financial crisis amid ever-escalating trade war. In fact, according to Georgieva, who apparently was brought in to take the blame for Lagarde’s disastrous legacy, global trade growth “is close to a standstill”, which last time we checked was 0%.
It means we are about about to have a new entry in the “worst since Lehman” category.
By now it is no secret to anyone that everyone – global institutions, economists and investors – have blamed the U.S.-China tariff war as the main reason for slowing global growth (and catalyst behind upcoming QE). The trade tensions have partly caused manufacturing to tumble and weakened investment, creating a “serious risk” of spillover to other areas of the economy like services and consumption, Georgieva said on Tuesday according to Bloomberg.
“The global economy is now in a synchronized slowdown,” she said, noting that the fund estimates that 90% of of the world is seeing slower growth. This is a huge change to the global economy from two years ago, when growth was accelerating across three-quarters of the globe in a synchronized upswing.
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