The head of the International Monetary Fund (IMF) has signalled a possible downward revision of already pessimistic global economic forecasts.
At an online event hosted by the European University Institute, managing director Kristalina Georgieva warned that the rekindling of the trade war between the United States and China could weaken a recovery from the coronavirus pandemic.
She added that recent economic data for many countries was already missing the fund’s forecast for a 3% contraction in 2020.
“With no immediate medical solutions, more adverse scenarios might unfortunately materialise for some economies,” Georgieva said.
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This projection would mark the steepest downturn since the Great Depression of the 1930s, with a partial rebound in 2021. The fund warned outcomes would be dependant on the course of the pandemic.
The fallout from the pandemic has already hit the US particularly hard. On Friday, President Trump threatened to punish China for how it handled the virus.
China and the US had spent months thrashing out a phase one trade deal, which could now be taken off the table.
Officials from both countries said they would press ahead with implementing the initial trade deal, but some say the agreed terms on purchasing are some way behind being met. The first-year goal is a $77bn (£62bn) increase on 2017 levels.
“It is hugely important for us to resist what may be a natural tendency to retreat behind our borders,” Georgieva said of the deal.
Monthly US government data, also released on Friday, showed the unemployment rate surging to 14.7% last month. The White House said unemployment could hit 20% in May.