“Bottlenecks” need to be removed

Thursday, 2019-10-24 16:07:38
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NDO - The Annual Meetings of the Boards of Governors of the World Bank Group (WBG) and the International Monetary Fund (IMF) lasted for a week and have just ended in Washington, DC, the US. Many experts at the meeting shared the same opinion that the world economy, which has been declining due to the impact of trade conflicts, is facing a series of challenges ahead as well as “bottlenecks” that need to be removed.

At the meeting, leaders of the IMF and the WB called on 189 member economies to resolve “bottlenecks”, or rising disagreements on trade and other issues, warning that, these bottlenecks are threatening to exacerbate the effects of the slowdown in global economic growth. IMF Managing Director Kristalina Georgieva has pointed out the negative impacts from many factors such as the trade war between the world's two leading economies, the US and China; weak economic conditions spreading across Europe as a result of the UK leaving the European Union (EU) - also known as Brexit, and rising tensions in the Middle East.

She also pointed out that trade tensions are damaging the confidence of businesses and investors, together with slowing growth for nearly 90% of the world. IMF Managing Director acclaimed the US and China for having reached part of a trade agreement, but said that the stable growth of the global economy will not return until the two countries completely resolve their disagreements. The IMF has forecast that the comprehensive impact of US-China trade tensions would reduce global economic output by 0.8%.

Meanwhile, World Bank Group President David Malpass said that the global economic slowdown is hindering efforts to support the 700 million people living in extreme poverty around the world, especially those in countries that have to deal with the influx of people fleeing conflicts.

IMF’s latest World Economic Outlook projections show 2019 GDP growth at 3.0%, down from 3.2% in a July forecast, largely due to increasing fallout from global trade friction. This is also the fourth time in a row that the IMF has revised its forecast downward. The GDP growth of the world's leading economic economies, such as the US, China and the EU, were also adjusted down to 2.4%, 6.1% and 1.2%, respectively, from 2.6%, 6.2% and 1.3% in the July forecast.

Attending the Annual Meetings of the IMF and WBG, finance ministers and central bank governors of the G20 Group also expressed their concerns about the global economic slowdown, expecting that the growth rate will be stronger next year provided that risks do not increase. Japanese Minister of Finance Taro Aso said that risks for the global economy were tilted to the downside, particularly due to further escalation of trade and geopolitical tensions. He added that G20 finance leaders agreed that global imbalances must be addressed in a multilateral way to achieve sustainable global growth.

The IMF said global growth was set to pick up to 3.4% in 2020 due to expectations of better performance in Brazil, Mexico, Russia, Saudi Arabia and Turkey. World Bank Group President Malpass said that broad-based growth is still possible in 2020, with a bright spot in consumption and rising wages, especially in emerging and developing economies.

However, in order to achieve broad-based growth, IMF and WBG officials emphasised the need to step up a series of joint efforts with drastic measures to reduce trade conflicts, strengthen multilateral cooperation, provide timely support for economic activities, and deal with short-and medium-term issues that threaten to stabilise global growth. This is no easy task. To achieve this goal, it is necessary to have the goodwill, effort and coordination of all economies in the world, especially in the context that global and multilateral cooperation is being hindered by “bottlenecks” in trade conflicts.