Advertise Here [468 W x 60 H pixels]
Web Exclusive | October 2018

Trade conflicts hitting growth outlook: IMF chief

International Monetary Fund Managing Director Christine Lagarde said recently that trade disputes and tariffs are starting to dim the outlook for global growth, calling on countries to resolve their differences and reform global trading rules. Lagarde, in a speech ahead of the IMF and World Bank’s annual meetings in Indonesia, said growth was at its highest level since 2011, but had plateaued, with fewer countries participating in the expansion. “In July, we projected 3.9 percent global growth for 2018 and 2019. The outlook has since become less bright, as you will see from our updated forecast next week,” Lagarde said, without providing new figures. “A key issue is that rhetoric is morphing into a new reality of actual trade barriers. This is hurting not only trade itself, but also investment and manufacturing as uncertainty continues to rise,” she added. 

While the United States is growing strongly because of tax cuts and easy financial conditions, there are signs of slowing in the euro area and Japan, she said. China is also showing signs of growth moderation, a trend that will be exacerbated by its trade disputes with the United States, which has imposed tariffs on $250 billion worth of imports from China and is threatening duties on $267 billion more. The trade war, along with higher interest rates and a stronger US dollar, is starting to affect some emerging market countries, Lagarde said, citing new IMF research that suggests emerging market countries excluding China could potentially face debt portfolio outflows of up to $100 billion. That’s a level that would broadly match outflows during the global financial crisis a decade ago. 

“To be clear, we are not seeing broader financial contagion — so far — but we also know that conditions can change rapidly. If the current trade disputes were to escalate further, they could deliver a shock to a broader range of emerging and developing economies,” Lagarde added. The IMF and World Bank meetings in Indonesia come 20 years after the Asian financial crisis, in which the archipelago suffered massive capital outflows and had to turn to the IMF for a bailout package that brought painful austerity. Lagarde praised Indonesia’s efforts to build a more resilient economy and said the IMF would provide financial assistance where needed.

Without specifically naming the United States and China, Lagarde called on countries to “de-escalate and resolve the current trade disputes” and start to work on building “smarter rules” for the global trading system, including reforms to the World Trade Organization. “The immediate challenge is to strengthen the rules. This includes looking at the distortionary effects of state subsidies, preventing abuses of dominant positions and improving the enforcement of intellectual property rights,” she said, citing issues affecting both Chinese practices and US technology company dominance. But if agreement among all countries cannot be achieved, she said she would encourage them to work on more flexible trade deals by “like-minded” countries to work within WTO rules. Particular attention needs to be focused on e-commerce and trade able services, such as engineering, communications and transportation, Lagarde said. IMF research shows that reducing trading costs by services by 15 per cent could boost total gross domestic product of G20 countries by more than $350 billion this year — the equivalent of adding another South Africa to the group. Lagarde also warned about the risks of a growing debt pile that has reached a record $182 trillion, about 60 per cent higher than at the start of the financial crisis in 2007. 
Post your comment
Name:  
Email:    
Comments:  
Verification Code:   Change Image


 
Advertise Here [728 W x 90 H pixels]
AB Carter India Pvt Ltd      Angel Mechtronik      Arvind Rub-Web Controls Ltd      Associated Autotex Ancillaries Pvt Ltd      ATE Enterprises Pvt Ltd      B & R Industrial Automation Pvt Ltd      Basant Mechanical Works      Batliboi Ltd      Best Power Equipments India Pvt Ltd      Bharat Beams Pvt Ltd      Bhatt Bros      Condair      Elgi Electric and Industries Ltd      Embee Corporation      Eppinger Tooling Asia Pvt Ltd      Excel Traders      Gandhi Automations Pvt Ltd      Ion Exchange India Ltd      ITEMA WEAVING (INDIA) PVT LTD      Jogindra Industries Pvt Ltd      K.U. Sodalamuthu and Co. Pvt Ltd      Konica Electronics Enterprise      Kusters Calico Machinery Pvt Ltd      Labelmach      Lakshmi Machine works Ltd      Leuze Electronic Pvt Ltd      Loepfe Brothers Ltd (Masterline)      M-Tex Enterprises      Mayur Reeds And Healds Pvt Ltd      Nestling Technologies      Peass Industrial Engineers Pvt Ltd      Phoenix Textile Engineering Pvt Ltd      Prashant West Point Machinery Pvt. Ltd      Premier Evolvics Pvt Ltd      RENMAKCH India Pvt. Ltd      Rieter India Pvt Ltd (Suessen)      Rieter India Pvt. Ltd      Rossari Biotech Ltd      Savio Texcone Pvt Ltd      SB Dye Springs India Pvt Ltd      Schoch Reeds India      South Gujarat Chamber of Commerce & Industry      SRE Corporation      SSM Scharer Schweiter Mettler Ag (Rieter)      Stovec Industries Ltd      Sunrise Industries      Swiss Ribbons Pvt Ltd      Thies GmbH and Co.      Thymas Electronics Pvt Ltd      Truetzschler India Pvt Ltd      Uster Technologies AG      Vetal Hitech Machines Pvt. Ltd      Weavetech Engineering Pvt Ltd      AB Carter India Pvt Ltd      Angel Mechtronik      Arvind Rub-Web Controls Ltd      Associated Autotex Ancillaries Pvt Ltd      ATE Enterprises Pvt Ltd      B & R Industrial Automation Pvt Ltd      Basant Mechanical Works      Batliboi Ltd      Best Power Equipments India Pvt Ltd      Bharat Beams Pvt Ltd      Bhatt Bros      Condair      Elgi Electric and Industries Ltd      Embee Corporation      Eppinger Tooling Asia Pvt Ltd      Excel Traders      Gandhi Automations Pvt Ltd      Ion Exchange India Ltd      ITEMA WEAVING (INDIA) PVT LTD      Jogindra Industries Pvt Ltd      K.U. Sodalamuthu and Co. Pvt Ltd      Konica Electronics Enterprise      Kusters Calico Machinery Pvt Ltd      Labelmach      Lakshmi Machine works Ltd      Leuze Electronic Pvt Ltd      Loepfe Brothers Ltd (Masterline)      M-Tex Enterprises      Mayur Reeds And Healds Pvt Ltd      Nestling Technologies      Peass Industrial Engineers Pvt Ltd      Phoenix Textile Engineering Pvt Ltd      Prashant West Point Machinery Pvt. Ltd      Premier Evolvics Pvt Ltd      RENMAKCH India Pvt. Ltd      Rieter India Pvt Ltd (Suessen)      Rieter India Pvt. Ltd      Rossari Biotech Ltd      Savio Texcone Pvt Ltd      SB Dye Springs India Pvt Ltd      Schoch Reeds India      South Gujarat Chamber of Commerce & Industry      SRE Corporation      SSM Scharer Schweiter Mettler Ag (Rieter)      Stovec Industries Ltd      Sunrise Industries      Swiss Ribbons Pvt Ltd      Thies GmbH and Co.      Thymas Electronics Pvt Ltd      Truetzschler India Pvt Ltd      Uster Technologies AG      Vetal Hitech Machines Pvt. Ltd      Weavetech Engineering Pvt Ltd