Home / Business/ IMF’s Lagarde says global economic outlook darkening by the day

IMF’s Lagarde says global economic outlook darkening by the day


Comments / {{hitsCtrl.values.hits}} Views / Wednesday, 13 June 2018 09:22

Facebook

Berlin (Reuters): International Monetary Fund chief Christine Lagarde led an attack by global economic organisations on US President Donald Trump’s “America First” trade policy on Monday, warning that clouds over the global economy “are getting darker by the day”.

Trump backed out of a joint communique agreed by Group of Seven leaders in Canada at the weekend that mentioned the need for “free, fair and mutually beneficial trade” and the importance of fighting protectionism.

The US president, who has imposed import tariffs on metals, is furious about the United States’ large trade deficit with key allies. “Fair trade is now to be called fool trade if it is not reciprocal,” he tweeted on Monday.

In response, Lagarde unleashed a thinly veiled attack on Trump’s trade policy, saying challenges to the way trade is conducted were damaging business confidence, which had soured even since the weekend G7 summit.

The Washington-based IMF is sticking to its forecast for global growth of 3.9% both this year and next, she said, before adding: “But the clouds on the horizon that we have signalled about six months ago are getting darker by the day, and I was going to say by the weekend.”

“The biggest and darkest cloud that we see is the deterioration in confidence that is prompted by (an) attempt to challenge the way in which trade has been conducted, in which relationships have been handled and in which multilateral organisations have been operating,” Lagarde said.

The IMF managing director spoke after a meeting in Berlin with German Chancellor Angela Merkel and the chiefs of the World Trade Organisation (WTO), the World Bank, the Organisation for Economic Cooperation and Development (OECD), the International Labour Organization and the African Development Bank.

Merkel said on Sunday the EU would implement counter-measures against US tariffs and described Trump’s rejection of the G7 communique as “sobering and a bit depressing”.

Investors are fearful of a tit-for-tat trade war, though markets were relatively calm on Monday after an early wobble.

“Stop this escalation”

WTO Director-General Roberto Azevedo told the Berlin news conference: “We must ... stop this escalation of tensions. A tit-for-tat process is not going to be helpful.”

He also criticised the United States’ conduct at the WTO.

“The US has been focusing much more on bilateral - unilateral even sometimes - measures, which is not something that is support of the rules-based trading system.

“They have been complaining about the system, they say that they want to improve the system, but we would expect a more constructive approach on their part,” Azevedo said.

Earlier, Germany’s economy minister said Berlin saw no immediate solution to the trade row between the United States and other major economies but remained open to talks “among friends”, seeking to head off a full-blown global trade war.

As Europe’s biggest exporter to the United States, and with more than one million German jobs at stake, Germany is desperate to avoid an EU trade war with the United States.

“I believe a win-win situation is still possible,” Economy Minister Peter Altmaier, one of Merkel’s closest lieutenants, told broadcaster Deutschlandfunk.

“At the moment, however, it seems that no solution is in sight, at least not in the short term.”

Particularly concerning for Germany, a major car exporter to the United States, is Trump’s weekend tweet that Washington is looking at tariffs on automobiles.

The European Commission, which coordinates trade policy for the 28-member EU, aims to target 2.8 billion euros worth of U.S. imports, including bourbon and jeans, with additional 25% duties from early July.

It already has broad backing from EU member states, but needs to consult with them in the next couple of weeks.

European Commission President Jean-Claude Juncker, while questioning whether the United States was truly an ally, said the bloc did not want to stop talking with Washington. “We do not want to cut off discussions and further talks will of course need to address the automobile sector,” he said. 


Share This Article

Facebook Twitter


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

Timely measures are necessary to save the local industries

Thursday, 20 June 2019

The security situation in the country is gradually improving since the Easter Sunday bombing which brought social life and economic commitments to a standstill. The day-to-day life is getting back to normalcy. International travel adversaries have be


Disinformation is bad; wilful disinformation is worse

Thursday, 20 June 2019

Seya Sadewmi was a five-year-old girl who was abducted, raped and murdered. The body of this little girl, missing from her home for a little more than a day was found near a canal 200 m away. An autopsy revealed that Sadewmi had been sexually assault


A day in the life of a democracy

Thursday, 20 June 2019

When you listen to the news and observe views from the country of the mother of all parliaments, it is quite interesting, and I dare say there is so much to learn from it. I am not in any way referring to pursue subservient veneration nor behavioural


Sri Lankan companies: Be brilliant on basics

Thursday, 20 June 2019

The $ 87 billion Sri Lanka economy is registered a 3.5% GDP growth in Q1 2019 in the backdrop of South Asian growing at 6% which explains how far away we are in relation to our neighbouring countries – India, Pakistan and Bangladesh. I guess the Q2


Columnists More