The IMF's new chief unveils data showing trade conflicts could wipe out $700 billion in global GDP by 2020

European Budget and Human Resources Commissioner Kristalina Georgieva holds a news conference after a meeting of the EU executive body in Brussels, Belgium, July 27, 2016. REUTERS/Francois Lenoir/File Photo EU Commissioner Georgieva holds a news conference in BrusselsThomson Reuters


As Kristalina Georgieva prepared to take over the reins of the International Monetary Fund, the new managing director took a moment to issue a stark warning about the global economy.

Georgieva gave her inaugural speech on Tuesday after assuming the role of managing director on October 1 following Christine Lagarde's departure early this year to run the European Central Bank.

The new IMF chief warned the global economy is facing a "synchronized slowdown" amid mounting trade tensions that could wipe out as much $700 billion in global GDP output by 2020. Much of the slowdown would come from negative market reactions and waning business confidence, she added.

"In 2019, we expect slower growth in nearly 90 percent of the world," Georgieva said during her speech on Tuesday. "The global economy is now in a synchronized slowdown."

She continued: "This widespread deceleration means that growth this year will fall to its lowest rate since the beginning of the decade."

The IMF's projection includes President Donald Trump's planned tariff hike on another $300 billion worth of Chinese imports.

The comments came as US stocks experienced a sharp sell-off on Tuesday following escalating tensions between the US and China. The White House is reportedly considering limits on US investment into China and the Commerce Deparment added 28 Chinese entities to its export ban list on Monday.

Georgieva said countries need to discuss legitimate trade issues such as subsidies, intellectual property rights, and technology transfer.

"Everyone loses in a trade war," She added.

Read more: The world's most accurate economic forecaster sees a 'prolonged global slowdown' on the horizon - and warns it can only be narrowly avoided

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