Global trade marked by lack of trust — IMF's LaGarde

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The biggest danger from the U.S. -China trade war "will not be something that will affect only the two countries because the world is so interconnected".

"So overall, the near-term prospect for the global economy continues to be bright".

Africa's largest economy Nigeria, is expected to expand 2.1 percent this year whereas the continent's most advanced economy, South Africa's growth is expected at 1.5 percent, from 0.9 percent forecast three months ago.

Lagarde says the momentum is driven by the U.s, Europe, Japan, China and many emerging economies.

Lagarde warned about the world's escalating public and private debt which now stands at a whopping US$164 trillion dollars of which two-thirds are held by the private sector.

Lagarde's comments came at a news conference to open the spring meetings of the 189-nation International Monetary Fund and its sister lending organization, the World Bank.

In its World Economic Outlook released on Tuesday, the International Monetary Fund cited 2016 research showing that tariffs or other barriers leading to a 10 percent increase in import prices in all countries would lower global output by about 1.75 percent after five years and by close to 2 percent in the long term. And the results for the United States are not pretty.

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Mnuchin insisted Thursday that the administration's imposition of tariffs on steel and aluminum imports and its consideration of penalty tariffs on up to $150 billion of Chinese imports were part of a strategy to level the playing field on trade and reduce America's huge trade deficits with China and other nations.

Trump and Abe said that they instead begun talks to secure a "free, fair and reciprocal" trade agreement.

Global financial vulnerabilities have built up during the recent years of expansionary policies and could put growth at risk, the report, out on Wednesday, said. "This would be an inexcusable, collective policy failure", said Lagarde. But trade tensions after President Donald Trump's call for tariffs could hinder that growth, Lagarde warned. It said lower US corporate income tax rates and accelerated investments due to a temporary tax break would boost USA growth through 2020, but these effects would then reverse quickly, causing a slowdown.

While the Fed has been raising rates at a gradual pace, Lagarde expressed concern about the consequences if the Fed had to accelerate the pace of its rate hikes. The policy would encourage investment around the world, she added.

Urging countries to "steer clear of all protectionism", she said that unilateral trade restrictions had "not proven helpful".

The IMF chief quickly added, however, she felt "the US should try to [move] its deficit and [national] debt downward rather than upward".