IMF urges governments to avoid harming trade and investment
WASHINGTON: With the United States-China frictions hanging over its annual meeting, the International Monetary Fund (IMF) on Thursday warned governments to avoid harming trade and investment, which have been key drivers of the global economic recovery.
IMF managing director Christine Lagarde said escalating trade tensions could reverberate through the world economy, choking off investment, and she urged the sides to resolve their disputes through dialogue.
“Investment and trade are two key engines that are finally picking up. We don’t want to damage that,” she said during the opening of the spring meetings of the IMF and World Bank.
In its latest World Economic Outlook this week, the IMF listed the trade tensions as a key downside risk to the otherwise encouraging global recovery and warned they could harm the poorest the most through rising prices. It cites growing trade volumes and solid investment as driving the uptick in global growth to 3.9 per cent this year and next.
US President Donald Trump last month imposed steep tariffs on steel and aluminium imports and threatened to impose more on tens of billions of dollars in Chinese imports, prompting Beijing to slap duties on US goods like pork and sorghum and to threaten even more sensitive US exports like soyabeans.
While she acknowledged “the actual impact of growth is not very substantial when you measure in terms of gross domestic product”, Lagarde said the dispute could erode business confidence very quickly.
While she welcomed bilateral discussions between Washington and Beijing, she said disagreements should be resolved in a multilateral forum.
Lagarde again urged countries to “steer clear of all protectionism”, saying that “unilateral trade restrictions have not proven helpful”.