But the Biden-Xi meeting sent “a very significant message to the world that international cooperation is important to all of us,” Georgieva said.
He warned that growth would suffer if the world splintered into geopolitical blocs led by the United States and Western allies on one side and China and other state-intensive economies on the other, with competitive technology and other standards.
This would reduce the output of world GDP by $1.4 trillion to $3.5 trillion, the Fund estimates.
“Imagine what the world can do with this kind of money,” Georgieva said.
Tariffs to China have been paid by Americans
US tariffs on hundreds of billions of dollars worth of Chinese goods have been borne by American consumers.
“And at a time of high inflation, this is the least desirable. Also, China recognizes that it has to rely on mutual cooperation because we see that the Chinese economy is in a very difficult situation,” he said.
Georgieva said she was pleased to see language in the G20 leaders’ joint statement calling on central banks to pace their interest rate hikes to avoid spillover effects on other countries. This was because inflation had skyrocketed in many emerging market economies due to the enormous strength of the dollar.
Asked if he saw evidence of US inflation easing given recent data showing easing price pressures, he said that was “possible” but needed to be followed to establish a trend.
Indicators show a “bleaker” path for the global economy, “meaning it’s slowing down and at that point, the Fed may reassess” as demand cools, he said.
