US-China trade deal to reduce global uncertainty: IMF chief

January 19 2020

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The newly signed US-China phase-one trade deal will reduce the uncertainty that has impeded global economic growth, International Monetary Fund (IMF) Managing Director Kristalina Georgieva has said.

"It is a welcoming sign that we now have the phase-one deal, sign in terms of reducing some of the uncertainty," Georgieva said on Friday during an event hosted by Peterson Institute for International Economics, a Washington-based thinktank.

The IMF chief said her organisation is making some projections around the impact of more certainty, which will be shared on Monday as part of the World Economic Outlook to be released at the World Economic Forum in Davos, Switzerland, Xinhua reported.

The multilateral lender expects the trade deal to support the growth of China's gross domestic product (GDP), Georgieva said. "It brings China in the parameters around the 6-per cent growth for 2020, rather than below," she said.

In October, Georgieva warned that trade tensions were "taking a toll" on global growth, at a time when the global economy was going through a "synchronised slowdown".

According to the IMF's earlier calculation, the cumulative effect of the US-China trade conflict, provided no actions taken, could mean a loss of 0.8 per cent of global GDP, or around $700 billion by 2020.

"What we are seeing now is that we've some reduction of this uncertainty, but it's not eliminated," Georgieva said, adding, "we would see shrinkage of this negative impact, but not the eradication of this impact."

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  • IANS