US-China trade deal to reduce global uncertainty, IMF chief says

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WASHINGTON: The newly signed China-US phase-one trade deal will reduce the uncertainty that has impeded global economic growth, International Monetary Fund (IMF) Managing Director Kristalina Georgieva 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 at an event hosted by Peterson Institute for International Economics, a thinktank based in Washington D.C.

The IMF chief said her organization 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.

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-percent 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 “synchronized slowdown.”

According to the IMF’s earlier calculation, the cumulative effect of the U.S.-China trade conflict, provided no actions taken, could mean a loss of 0.8pc of global GDP, or around 700 billion U.S. dollars by 2020.

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

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