At a banking conference hosted by Bloomberg on Tuesday, the International Monetary Fund (IMF) First Deputy Managing Director David Lipton warned over the gloomy outlook for the global economy.
Key Quotes (via Reuters):
The fund had been urging governments to “fix the roof” during a sunny last two years for the world economy.
“But like many of you, I see storm clouds building, and fear the work on crisis prevention is incomplete.”
“Central banks would likely end up exploring ever-more unconventional measures. But with their effectiveness uncertain, we ought to be concerned about the potency of monetary policy.”
“We should not expect governments to end up with the ample space to respond to a downturn that they had 10 years ago,”
“Stimulus may also be a hard sell politically, considering the financial burden it creates.”
“The biggest immediate risk, though, is the current trade war between the United States and China. If all of the threatened tariffs are put in place, as much as three-quarters of a percent of global GDP would be lost by 2020, the IMF has estimated.”
“That would be a self-inflicted wound. So it is vital that this ceasefire (recently announced between Washington and Beijing) leads to a durable agreement that avoids an intensification or spread of tensions.”
“If it doesn’t and a stalemate sets in, there could be a damaging “fragmentation” of the global economy that causes a downturn.”
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