Fi­nance of­fi­cials pledge to aid growth

Con­fronting ris­ing back­lash against glob­al­iza­tion

Kuwait Times - - BUSINESS -

World fi­nance lead­ers pledged Satur­day to use more re­sources to try to bol­ster eco­nomic gains as they con­front stub­bornly slow growth and a ris­ing back­lash against glob­al­iza­tion. The pol­icy com­mit­tee for the 189-na­tion In­ter­na­tional Mon­e­tary Fund said the world has “ben­e­fited tremen­dously from glob­al­iza­tion” but that pro­tec­tion­ism is a threat. In­creas­ing anger over glob­al­iza­tion dom­i­nated the an­nual meet­ings of the IMF and its sis­ter lend­ing agency, the World Bank.

The un­hap­pi­ness is ev­i­dent in Bri­tain’s vote in June to leave the Euro­pean Union and in the U.S. pres­i­den­tial cam­paign of Repub­li­can Don­ald Trump. Trump has said mil­lions of Amer­i­cans have lost jobs or seen wages stag­nate be­cause of un­fair trade prac­tices of coun­tries such as China and Mexico. He is vow­ing to im­pose penalty tar­iffs if those prac­tices are not halted.

The Bri­tish vote sent shock­waves through fi­nan­cial mar­kets this sum­mer, and there were fur­ther trou­bles Fri­day when the Bri­tish pound plunged by 6 per­cent against the dol­lar be­fore re­cov­er­ing. In­vestors worry whether there will be more tur­bu­lence if the Bri­tish exit proves to be messy and pro­longed. IMF Man­ag­ing Di­rec­tor Chris­tine La­garde said “growth has been too low for too long, ben­e­fit­ing too few,” and that’s what of­fi­cials need to ad­dress.

French Fi­nance Min­is­ter Michel Sapin said global lead­ers must ad­dress con­cerns of in­equal­ity and in­jus­tice caused by glob­al­iza­tion, such as tax eva­sion by big cor­po­ra­tions and job losses by work­ers. “We must fight against this im­moral­ity of glob­al­iza­tion, this in­equal­ity, to again give our peo­ple the taste for open­ness and mul­ti­lat­er­al­ism,” Sapin told re­porters. “There can be an un­happy glob­al­iza­tion and we must fight against it.”

Tech­no­log­i­cal change

In their state­ment, IMF of­fi­cials com­mit­ted to de­sign­ing and putting in place poli­cies “to ad­dress the con­cerns of those who have been left be­hind and to en­sure that every­one has the op­por­tu­nity to ben­e­fit from glob­al­iza­tion and tech­no­log­i­cal change.” The IMF, how­ever, did not spell out what ac­tions coun­tries would be will­ing to take. In an era of bud­getary con­straints, it is un­clear how gov­ern­ments will find the re­sources to ex­pand ed­u­ca­tion and job train­ing pro­grams and strengthen so­cial safety nets.

Mario Draghi, the head of the Euro­pean Cen­tral Bank, told re­porters that even with the tur­bu­lence linked to Bri­tain’s exit vote, he felt the short-term con­se­quences had not been as dra­matic as some had pre­dicted but “to think that there won’t be any con­se­quences would be prob­a­bly too hope­ful.”

Draghi said a lot will de­pend on how pro­longed the post-Brexit uncer­tainty lasts as Bri­tain and the EU ne­go­ti­ate next year over the terms of sep­a­ra­tion. “It’s a mat­ter of this political uncer­tainty that clouds the out­look for growth,” Draghi said.

US Trea­sury Sec­re­tary Ja­cob Lew urged the IMF to “more boldly and force­fully” push mem­ber coun­tries to pur­sue all eco­nomic pol­icy op­tions to spur growth. The Obama ad­min­is­tra­tion has ap­pealed to coun­tries such as Ger­many, which are run­ning bud­get or trade sur­pluses, to in­crease spend­ing and stim­u­late global de­mand. “We must not close our­selves off to the world, but rather re­dou­ble our com­mit­ment to en­sur­ing shared growth,” Lew said.

Trade bar­ri­ers

Var­i­ous fi­nance of­fi­cials said the decades­long ef­fort to tear down trade bar­ri­ers had lifted mil­lions of peo­ple in poor na­tions out of poverty. But they said not enough has been done to pro­tect work­ers who have lost jobs due to in­creased global com­pe­ti­tion. Ja­panese Fi­nance Min­is­ter Taro Aso told re­porters that free trade is cru­cial to driv­ing global growth. “If we re­ally want jobs and higher in­come, if we care about poverty re­duc­tion and eco­nomic fair­ness ... if we care about growth, then we need to be se­ri­ous about fos­ter­ing global trade and about mak­ing sure that global trade works for all,” La­garde said.

World Bank Pres­i­dent Jim Yong Kim noted the “tremen­dous anger against trade.” But, he said, “We are here be­cause we be­lieve in our mis­sion of end­ing ex­treme poverty,” Kim said. “We are not go­ing to do it with­out more ro­bust trade.” Kim said sup­port also needs to be in­creased for coun­tries that are wel­com­ing refugees flee­ing con­flict zones. He cited Le­banon and Jor­dan, which are tak­ing in refugees from Syria. —AP

WASH­ING­TON: In­ter­na­tional Mon­e­tary Fund (IMF) Man­ag­ing Di­rec­tor Chris­tine La­garde and In­ter­na­tional Mon­e­tary and Fi­nan­cial Com­mit­tee (IMFC) Chair Gover­nor of the Bank of Mexico Agustin Carstens, dur­ing the In­ter­na­tional Mon­e­tary and Fi­nan­cial Com­mit­tee (IMFC) con­fer­ence at World Bank/IMF An­nual Meet­ings at IMF head­quar­ters. —AP

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