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

Just Posted

Foreinger feeling like the first time after 40

Foreigner doesn’t miss a beat after 40 years

Octoberfest is the toast of the town

Eighth annual night of fun, music and brews

Vees lose 4-2 to Wenatchee

The Vees face the Wild again Wednesday, on home ice

Five decades of volunteering

Even though she is approaching 70, Merle kindred continues to volunteer around the world

Human remains found at Silver Creek property

RCMP have been searching the property in the 2200 block of Salmon River Road for the past three days

VIDEO: Sears liquidation sales continue across B.C.

Sales are expected to continue into the New Year

VIDEO: Oprah Winfrey and a celebrities attend ‘B.C. Miracle Concert’

Fundraiser featured Foster, Steven Tyler, The Tenors, Matteo Bocelli, Laura Bretan, Carly Rae Jepsen

Reel Reviews: Nothing left to lose

We say, “Grieving Quan kicks butt”

New B.C. acute care centre opens for young patients, expectant mothers

Facility aims to make B.C. Children’s Hospital visits more comfortable

Search ramps up for B.C. woman after dog, car found near Ashcroft

Jenny Lynn Larocque’s vehicle and dog were found in Venables Valley, but there is no sign of her

Police officer hit by car, stabbed in Edmonton attack back on job

Const. Mike Chernyk, 48, returned to work Thursday

UBC medical students learn to care for Indigenous people

Students in health-related studies to take course, workshop to help better serve Aboriginal people

Dorsett has 2 goals, assist in Canucks’ 4-2 win over Sabres

‘It was a real good hockey game by our group,’ Canucks coach Travis Green said.

Berry disappointed: Bear tries to eat fake fruit on woman’s door wreath

A Winnipeg woman has taken her berry-embellished wreath down, after a hungry bear visited her porch

Most Read