The International Monetary Fund (IMF) welcomed the recent inking of the partial “phase one” of the trade deal between the United States and China, saying that it is a “pathway to peace,” Managing Director Kristalina Georgieva. The IMF also revised its forecast of the global economic growth in 2020 to 3.3% from 3.4% following the announcement of the finalization of the America-Sino trade agreement.
Back in the World Economic Forum in Davos, Switzerland, Georgieva said that the phase one of the trade deal had only “reduced by 0.3% what would have been the cost on the world economy.”
After months and months of negotiations, the United States and China have formally signed last week a partial deal to end the volley of tariffs that the two have been imposing on each other for the last year. The 18-month negotiation has culminated after the two economic giants have come down to an acceptable deal.
“Last year, we ended up with 2.9% growth. It would have been less than 2.5%, which, by the judgment of the IMF, means recession, so we have avoided that,” Georgieva told the panel moderated by CNBC’s Geoff Cutmore.
“Of course, central banks, many are running out of space — not the U.S. — but many others are in a tougher place, and that has helped,” she added.
Despite the unexpected downgraded forecast for this year, Georgieva said that the temporary economic truce between U.S. and China could see a “bottoming out in trade and industrial output.”
“We have reduced our forecast from 3.4% to 3.3%, but it is only because of India, the main reason for the downgrade, and because of unrest in a couple of countries. The rest of the world looks better today than it did in October,” she said.