New Delhi, Dec 16 :
Global economic activity in 2020 is likely to witness an improvement with the latest announcement of a trade deal between the US and China alongside other developments like reduced likelihood of a no-deal Brexit, IMF Chief Economist Gita Gopinath said. Gopinath added that as a result of heightened trade and geopolitical tensions and country-specific factors in emerging markets, global growth slowed to the lowest level since the global financial crisis this year.
The International Monetary Fund’s (IMF) October 2019 World Economic Outlook pegged global growth at 3 percent this year and 3.4 per cent in 2020 — 0.3 and 0.2 percentage points lower than the April forecast, the economist noted.
Growth of advanced economies is being weighed down by weak productivity growth and ageing demographics. Consequently, a sharp weakness in manufacturing and trade is being experienced almost across the globe, she added. “A recovery is expected in 2020 but that remains precarious. Since then, global growth has been lower-than-forecasted in some large emerging markets, notably India, and civil unrest is taking a toll on some countries,” Gopinath told PTI in an interview. One of the leading economists in the world, 48-year-old Gopinath joined the IMF early this year. “At the same time, we are seeing tentative signs of stabilisation, with the decline in manufacturing and trade appearing to have bottomed out. The announcement of a trade deal between the US and China, reduced likelihood of a no-deal Brexit and the significant policy stimulus put in place in 2019 should support a pick-up in activity in 2020,” the top IMF official said in response to a question. Gopinath said that in the near term, the main challenge is to deal with potential downside risks. “While the recently announced trade deal between the US and China is positive, the risk of further disruptive trade barriers, including in areas of technology and foreign investment, remains substantial. This could dent sentiment and slow investment further,” Gopinath said. Investment growth at present is already at a multi-year low, a factor which could imply lower potential growth going forward, she said. When asked if US President Donald Trump’s economic policies are disruptive as far as the world economy is concerned or if it is creating an upheaval, she said the IMF has repeatedly highlighted the dampening impact of trade tensions on investment and growth.
