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The International Monetary Fund has warned governments not to make waves, trade wars or other disruptions, at a time when the global economy is already going through rough waters.
"We are seeing risks, so we have to be very careful," said David Lipton, IMF's first deputy managing director, Bloomberg Television. "With trade tensions, not knowing where monetary policy will go, nor what will be the evolution of Chinese growth, it's time to ensure that policymakers do not hurt."
He urged the United States and other countries to resolve their trade disputes – a major risk that the IMF has warned repeatedly since President Donald Trump began imposing tariffs last year. .
"The last thing we want is another slowdown," said Lipton, on the sidelines of the fund's spring meetings in Washington.
The threat of political missteps is hovering over the global economy in the midst of a brutal reaction against free trade that has fueled the rise of populist governments around the world. The IMF lowered its global growth outlook this week to 2019, the lowest since the 10-year financial crisis, as conditions deteriorated in most major advanced economies.
Commercial wars
The United States and China are stuck in tense negotiations to end their nine-month trade war. Even if they reach an agreement, a trade deal between the two largest economies in the world could have unintended consequences if China undertook to buy US products that supplant imports from other parts of the world. other Asian countries, said Changyong, head of the Asia-Pacific Department of the IMF. Rhee said Friday.
There is also a risk of new fronts breaking out in the trade war. The European Union plans to receive 10.2 billion euros of US goods with retribution rates on subsidies to Boeing Co., according to a draft list seen by Bloomberg News.
The plan follows the US threat to claim $ 11 billion in damages by imposing duties on European products ranging from helicopters to cheese to state aid to Airbus SE. Both of these initiatives are the result of parallel disputes within the 14-year-old World Trade Organization over aircraft vendor support that distorts the market.
Asked about the transatlantic trade tensions, the European Commissioner for Economic Affairs, Pierre Moscovici, said that it was time for the European Union and the United States to "calm down" and stand at the same time. away from a trade war. It's "absurd" for the US to consider the EU as a threat like China, he said in an interview with Bloomberg TV.
In Europe, weakness was particularly pronounced in Germany and Italy, although the base is a gradual recovery, said IMF European Director Poul Thomsen at an information meeting held in Washington Friday.
Brexit woes
At the same time, Britain's departure from the EU continues to drag on. The United Kingdom was due to leave the EU on March 29, but had to apply twice for an extension to the other 27 bloc leaders. The latest plan, approved this week at a summit in Brussels, provides for the UK to leave the bloc by 31 October at the latest. The May government is in talks with Labor Opposition to see if they can agree on a compromise that would be supported by Parliament.
"This is not an economic debate," Bloomberg TV told Chancellor of the Exchequer Philip Hammond. "Frankly, if we were solely motivated by economic considerations, the British people would have decided to stay in the European Union. The reasons for voting were not economic, but emotional, political. "
The challenge is "to find a way to respond to the political decision of the British people to protect our economy, to protect British jobs and prosperity," he said.
Emerging Markets
In emerging markets, investors were reminded of the dangers of government interference in the economy when Brazilian President Jair Bolsonaro ordered state-owned Petrobras to refrain from raising diesel prices on Thursday. This hasty decision revived fears of interventionist policies that undermined the largest economy in Latin America under previous governments.
Certainly, there are signs that the global economy may be turning the page. The IMF can not predict a recession. Growth will resume in the second half of the year, said Bank of Japan Governor Haruhiko Kuroda, stressing that stimulus measures adopted by China have an effect.
"It's true that the risks of degradation are important," Kuroda said. However, "I expect global growth to increase in the second half of the year. The accommodative monetary environment will continue, while the favorable effects of Chinese policy should begin to slowly emerge. "
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