EU-US tensions could impact global growth, says IMF

Ahead of the World Economic Forum 2020 in Davos, Switzerland, which started today, the International Monetary Fund’s managing director Kristalina Georgieva presented the updated economic outlook.
She said that there is a trend of stabilization after the economic slowdown registered in 2019, and added that it is thanks to the progress of trade and industrial output.
However, Georgieva saidthat the global growth remains “sluggish”, and warned the governments to be ready to act if it slows again. IMF’s chief economist, Gita Gopinath, added that the EU-US trade tensions are among the biggest risks: “Such events, alongside rising geopolitical risks and intensifying social unrest, could reverse easily financial conditions, expose financial vulnerabilities and severely disrupt growth”.
Gopinath said that the slightly positive view on the global economy was mainly thanks to the steps the US and China took to reduce the trade dispute. She also stressed the role that central banks play in the fight against climate change, which is a key topic on this year’s summit in Davos.
The IMF concluded that countries should have measures prepared in advance in order to have a “timely fiscal response”. It also called for a new taxation regime against tax erosion and tax evasion, which Gopinath said should have implications for the tax revenues of both the advanced economies and the developing ones.