The widespread deceleration means that global growth will fall to a record low this year, Kristalina Georgieva, the new Managing Director of the International Monetary Fund, warned in her inaugural speech at a joint meeting of the World Bank and the IMF in New York.
According to the new IMF chief, there are two alarming trends in the global economy: a record-breaking slowdown and a corporate debt that exceeds the level of the 2008 financial crisis. The global economic growth rate for this year is likely to be the lowest in a decade.
“Global trade growth has come to a near standstill,” Kristalina Georgieva said.
Approximately 40% of the global corporate debt, or about $19 trln, is at risk of default —this risk was not so high even in 2008.
Discussing the negative factors affecting the global economy, she highlighted the general uncertainty — driven by trade as well as by Brexit and geopolitical tensions in various parts of the world. According to the IMF, worldwide manufacturing activity and investment have weakened substantially and there is a risk that services and consumption could soon be affected as well.
Earlier, the World Bank lowered its forecast for the global economic growth in 2019 by 0.1 ppt, to 2.5%, and the global trade growth projection from 2.6% to 1.5%.
Kristalina Georgieva was elected IMF Managing Director on October 1. The head of this international financial organization rotates every 5 years.