IMF’s chief economist warned the world leaders to take a lesson from the 'Yellow Vests Movement'.

Iran Press/America: World leaders should immediately work to end the tensions in their countries that are impacting on the global economy, the IMF’s chief economist has urged.

In a press conference at the World Economic Forum in Davos, Gita Gopinath said that recent political events, such as the uncertainty of Brexit, the US shutdown, the 'Yellow Vests Movement' and the global trade war could further worsen the global growth outlook, Iran Press reported.

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"Political risks are clearly very important", Gopinath said.

"I think what is important is instead of waiting for an escalation of these political risks, is for leaders to immediately take action that prevents such unhappiness with the way that things are working out with some sections of society, so these are real concerns that need to be addressed", she added. 

Gopinath added that if there was an escalation of the trade war, especially between the US and China, it would have a negative impact on the forecasts.

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She said that it seemed that financial markets had recently become more affected by trade tensions than they were last year.

"While financial markets in advanced economies appeared to be decoupled from trade tensions for much of 2018, the two have become intertwined more recently, tightening financial conditions and escalating the risks to global growth," she reiterated.

Meanwhile, the IMF has slashed its global growth outlook for 2019 to 3.5% - down from the 3.7% it penciled just months ago in October – because of political uncertainty and trade tension, in its World Economic Outlook released on Monday.

The outlook revised down its forecast for France, following the 'Yellow Vest' protests at the end of 2018.

Yellow Vest demonstrators continued to protest in France by gathering in Paris on Saturday Jan. 19, for their tenth consecutive weekend of protests against President Emmanuel Macron's government.

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The IMF expects China’s economic slowdown to continue. The forecast for this year and next is 6.2%.

In 2018 China experienced the slowest growth at 6.6%, since 1990, in line with previous IMF forecasts.

The report also highlighted disruptions to the motor industry in Germany because of new fuel emissions standards, revising growth for 2019 down to 1.3%, 0.6 percentage points lower than projected in October’s outlook.

For the UK, the IMF projects a 1.5% growth rate this year and next but said there is substantial uncertainty about the figure because of the unknown outcome of Brexit.

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Speaking of Brexit, Gopinath said: "A no-deal Brexit is one of the major risks to our forecast".

She said the IMF estimated a no-deal Brexit would cut the UK’s economic growth by 5 to 8 percentage points on the long term.

This would be, partly, because it could mean it would reverse its terms with the World Trade Organisation. 103/207

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