Because of the weakening economy in Germany, the new director of the International Monetary Fund (IMF), Kristalina Georgieva, called on the federal government to spend more money. Countries like Germany with room for maneuver in their households should stimulate the economy by means of "fiscal firepower", said the Bulgarian in a speech in Washington.
Greater public investment, particularly in infrastructure and research and development, would help boost "demand and growth potential," emphasized Georgieva. Similar appeals were addressed to the Netherlands and South Korea.
According to Georgieva, the entire global economy is in a "synchronized downturn". For 2019, slower growth is expected in "90 percent of the world". The global growth rate will fall to its lowest level since the beginning of the decade. Georgieva did not name a specific number yet. The IMF will release its forecasts for the world economy and individual countries and regions next Tuesday.
Trade conflicts one of the main causes
As one of the main causes of the global economic slowdown called Georgieva the continuing trade conflicts. The global growth of trade was "almost stalled". Partly due to trade conflicts, industrial activity and investment have declined significantly around the world.
The slowdown in German economic growth is also likely to be the subject of the annual meetings of the IMF and World Bank, which will take place in the US capital at the end of next week. In their most recent forecast, the leading German economic research institutes are only expecting German gross domestic product (GDP) to grow by 0.5 percent this year. In their spring report, they had still expected 0.8 percent.
For 2020, researchers lowered their forecast in the report published last week, from 1.8 percent to 1.1 percent. Growth is being slowed down by an "industry in recession". Reasons for this are the continuing trade conflicts and the uncertainty surrounding Brexit, the institutes explained.