Washington (AFP)

"The economy of Switzerland as a whole" or about 700 billion dollars. That's the cost of Donald Trump's global trade war, said Kristalina Georgieva, the IMF's new chief executive, on Tuesday.

The growth of the planet "is now experiencing a synchronized slowdown," she lamented, warning that the International Monetary Fund would release on Oct. 15 revised growth forecasts down for both 2019 and 2020.

In July, the IMF projected an expansion of 3.2% this year and 3.5% next year.

"In 2019, we expect slower growth in almost 90% of the world," said Kristalina Georgieva in a speech setting the tone for the upcoming fall meetings of the IMF and the World Bank in Washington.

Georgieva, who took office just a week ago, added that "growth will fall this year to its lowest level since the beginning of the decade".

The US president launched more than a year and a half ago a trade war against China to put an end to commercial practices deemed "unfair".

This conflict, which has resulted in reciprocal punitive tariffs on hundreds of billions of goods, has significantly affected all international trade.

"Global trade growth is almost at a standstill," said Georgieva.

And while the Trump administration is also threatening additional tariffs with its other partners, including the European Union, investor confidence has eroded.

World gross domestic product could be cut by around 0.8% by 2020, compared with an estimated 0.5% in July. "It's about the size of Switzerland's economy," she notes.

"We must act, I am confident that if we all cooperate together, we can have a better world for all," said the leader. "Yes, we can!" She said, echoing the famous slogan "Yes, we can!" of former President Barack Obama.

For that, it must be recognized that globalization has left the mark, especially among the least educated and rural youth, she observed.

"To help these vulnerable people, we must show empathy," she said.

It also calls on "countries with fiscal space to deploy or be ready to deploy a fiscal strike force" to help stimulate demand and growth, citing Germany, the Netherlands and South Korea. South.

- Corporate debt -

Along with trade, the difficult exit of the European Union from the United Kingdom (Brexit) and corporate debt are other serious threats.

In some countries, companies have taken advantage of low interest rates to take on debt in order to finance mergers and acquisitions rather than investing, the IMF observes.

"If a major slowdown occurs, the debt of companies at risk of default would increase to $ 19 trillion, or nearly 40% of the total debt in eight major economies": Germany, China, Spain, United States , France, Italy, Japan and the United Kingdom, underlines Ms Georgieva.

This is higher than the levels observed during the 2008 financial crisis.

Low interest rates also encourage investors to seek higher yields in emerging markets. "This leaves many small economies exposed to a sudden reversal of capital flows," she notes.

Looking to the future, she finally urged action to tackle climate change: "It's a crisis where no one is safe and everyone has a responsibility to act."

She promised measures within the Fund itself.

She also referred to a new IMF study showing that high carbon taxes are "powerful and effective tools" for tackling climate change provided they are accompanied by tax cuts and incentives to reduce emissions. investment in clean infrastructure.

The additional revenue from carbon taxes could thus be used to reduce the taxes of the most vulnerable households to help them ensure a better transition.

© 2019 AFP