Trade conflicts fuel synchronized global slowdown

China may have to wait to become second most powerful at IMF

China may have to wait to become second most powerful at IMF

The new International Monetary Fund chief warned the global economy is facing a "synchronised slowdown" amid mounting trade tensions that could wipe out as much $US700 billion in global GDP output by 2020.

She continued: "This widespread deceleration means that growth this year will fall to its lowest rate since the beginning of the decade".

The IMF Managing Director said that global trade growth has come to a "near standstill". "The global economy is now in a synchronised slowdown".

China - the world's second-largest economy as measured by nominal GDP (gross domestic product that calculates all the goods and services a country produces at current market prices) - is the IMF's third most influential member.

Georgieva, former chief executive officer of the World Bank, took over on October 1 as International Monetary Fund managing director, succeeding Christine Lagarde, who left to lead the European Central Bank.

"Uncertainty - driven by trade but also by Brexit, and geopolitical tensions - is holding back economic potential", Georgieva said.

The IMF's projection includes President Donald Trump's planned tariff hike on another $US300 billion worth of Chinese imports.

He has blamed any U.S. slowdown on mistakes made by the U.S. Federal Reserve in raising interest rates too high last year and being too slow to cut rates this year.

Trade battles are not only harming the global economy, Georgieva said, but they could have a long-lasting impact.

A deeper slowdown would require more fiscal support, Georgieva said.

In what could be seen as a jab at China and other protectionist states, she warned against subsidies, lax enforcement of intellectual property rights and technology transfers. Those issues are central to the USA demands in its negotiations with China.

"The key is to improve the system, not abandon it", she said.

World Bank CEO Kristalina Georgieva speaks during the forum Frontiers in Anticorruption at the World Bank/IMF annual spring meeting in Washington.

Those discussions are expected to be dominated by the global growth slowdown, the trade conflicts and concerns over what the impact of a messy exit by Britain from the European Union could do to European growth prospects.