World financial leaders fear trade war impact
NUSA DUA, Indonesia — Global financial leaders wrapped up an annual meeting of the International Monetary Fund and World Bank yesterday by urging countries to brace for potential risks from trade disputes and other tensions.
The meetings in Bali, Indonesia, this week were overshadowed by a spate of financial market turmoil and by the threat to global growth from the trade clash between the U.S. and China over Beijing’s technology policies.
The International Monetary and Financial Committee, which advises the IMF’s board of governors, issued a communique yesterday urging countries to keep debt under control, engineer policies to ensure credit is available in line with their levels of inflation and ensure sustained economic growth “for the benefit of all.”
IMF members also pledged to avoid devaluing currencies to seek a trade advantage by making a country’s exports relatively cheaper.
IMF Managing Director Christine Lagarde said while global growth is still strong, it has leveled off. The IMF started the meetings in Bali by downgrading its 2018 estimate for global growth to a still robust 3.7 percent from an earlier forecast.
“I think it’s not inconsistent to have a plateaued growth and downside risks that are the clouds on the horizon, some of which have begun to open up,” Lagarde said.
U.S. Treasury Secretary Steven Mnuchin downplayed the level of alarm, saying he doesn’t lose sleep over the possibility that China might step up its sales of U.S. treasuries in retaliation for pressure from Washington to alter national economic strategies aimed at nurturing Chinese leaders in many advanced technologies.
Mnuchin said it was still not certain if President Trump would meet with his Chinese counterpart Xi Jinping at a Group of 20 summit next month.
TRADE TALK: U.S. Treasury Secretary Steven Mnuchin, top, downplayed trade tensions at the IMF World Bank meetings in Indonesia, left.