IMF leader Lagarde warns against trade protectionism

IMF leader Lagarde warns against trade protectionism

WASHINGTON — The head of the International Monetary Fund says that after six years of disappointing growth, the world economy is finally gaining momentum. But she warns of a number of potential threats, ranging from political uncertainty in Europe to protectionism that could hinder global trade.

IMF Managing Director Christine Lagarde says that there is a critical need for more international co-operation, not less. Restricting trade flows would be a “self-inflicted wound” that would harm workers and consumers, she says.

In the text of a speech to be delivered in Brussels on Wednesday, Lagarde did not single out any country for specific criticism on the issue of protectionism. But in his campaign, President Donald Trump vowed to impose punitive tariffs on goods from countries he believes harm American workers by flouting global trade rules.

Trump has threatened to impose tariffs as high as 45 per cent on goods from China and Mexico unless those nations stop practices he says violate trade laws.

Resorting to protectionism would have a number of consequences, from disrupting supply chains for domestic companies to inflating prices that companies and consumer must pay, Lagarde said. A better approach would be for countries running large trade surpluses and those running deficits to co-operate in pursuing policies to deal with the imbalances, she said.

“Cooperation means working together to ensure that countries observe a level playing field,” Lagarde said.

In her prepared remarks, Lagarde gave a preview of next week’s spring meetings in Washington of the 189-nation IMF and its sister lending organization, the World Bank. The United States will be represented at the discussions by Treasury Secretary Steven Mnuchin and Federal Reserve Chair Janet Yellen.

Lagarde said that the discussions are taking place at a time when prospects for the global economy are improving after struggling for six years to emerge from the severe downturn triggered by the worst financial crisis since the 1930s.

“The good news is that after six years of disappointing growth, the world economy is gaining momentum as a cyclical recovery holds out the promise of more jobs, higher incomes and greater prosperity going forward,” Lagarde said the speech to be delivered at Bruegel, an economic research institute in Brussels.

Lagarde cited stronger manufacturing activity in advanced economies and continued robust gains in emerging economies, which she said will provide more than three-fourths of expected global growth in 2017.

One of the reasons for optimism is a rebound in the price of commodities which have brought relief to many low-income countries.

“Putting all this together, we see a global economy that has a spring in its step,” Lagarde said, while cautioning that there are clear downside risks.

She said in that addition to the threat to trade from rising protectionism and political uncertainty in Europe, there is concern about the slow gains being made in productivity, the amount of output per hour of work. She said a pronounced slowdown in productivity growth since 2008 in the United States and many other industrial countries has had a severe impact on the global economy.

She said if productivity had grown since 2008 as it had been before the financial crisis, economic output in advanced economies would be 5 per cent higher today — the equivalent of adding a country with output larger than Germany to the global economy.

Lagarde said that nations must find ways to reinvigorate productivity, such as investing more in education and infrastructure and providing tax incentives to foster more research and development.

Martin Crutsinger, The Associated Press

Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

COVID-19 outbreak declared at Calvary Chapel Kelowna

Attendees of the Sept. 13 morning church service may have been exposed, Interior Health says

Unofficial holidays: Here’s what people are celebrating for the week of Sept. 27 to Oct. 3

World Farm Animals Day, Drink Beer Day and Virus Appreciation Day are all coming up this week

Kelowna man injured during arrest sues RCMP

Supreme Court civil claim alleges Dustin Blondin was the victim of an ‘unprovoked attack’

United Way celebrates seven decades of impact in Southern Interior

Organization sees issues with poverty, mental health and addictions, heighten during the pandemic

Regional district funding phased out for Friends of Fintry

Heritage site volunteer group loses $39,000 grant incrementally over next two years

B.C. records 98 more COVID-19 cases, most in Lower Mainland

One new senior home outbreak, Surrey Memorial outbreak over

Public input sharpens vision of Oyama Ithmus Park

Proposed project to shape the long-term future of waterfront land in Lake Country

Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

PHOTOS: Ghost sighting in Vernon’s Polson Park

Mom and daughter photoshoot brings joy and laughter to bystanders

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

PHOTOS: 2nd calf in a month confirmed among Southern Resident killer whale pod

Center for Whale Research said they will eagerly await to observe the calf to evaluate its health

Parks Canada not responsible for Mount Kobau blockade

Nearby residents have been vocal about plans to turn the area into a national park

97 distressed horses, cats and dogs seized from farm in Princeton

RCMP assisted as BC SPCA executed search warrant

Most Read