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NUSA DUA, Indonesia (Reuters) – In the event that one of the central bankers and finance ministers meeting in Indonesia misses the message repeatedly this week, the host country has repeated it on Friday; everyone is likely to lose if trade wars can escalate.
A participant attends the plenary session of the International Monetary Fund – 2018 World Bank Annual Meeting in Nusa Dua, Bali, Indonesia, October 12, 2018. REUTERS / Johannes P. Christo
Indonesian President Joko Widodo did not mention the United States or China, the world's two largest economies, but he made clear who he was speaking to in an address to the plenary session of the International Monetary Fund meetings. and the World Bank on the island of Bali. .
"Lately, we have the impression that relations between major economies are more and more like Game of Thrones," Widodo said in a speech full of references to the HBO series on dynasties and kingdoms wrestling. for power.
"Are we so busy fighting and competing with each other that we do not notice the things that are threatening more and more, all of us, rich and poor, big and small," he said.
The poorer and more populous emerging countries like his are among the most vulnerable to the fallout from the ongoing US-China tariff war and the rise in US interest rates that is driving investors away and driving down currencies.
"All of these problems in the global economy are enough to make us want to say," Winter is coming, "" said Widodo, using a phrase that the characters in the popular fantasy series continually repeat to refer to spectral dangers. who could destroy them all.
With the rise of rivalry in the global economy, Mr Widodo said that "the situation could be more critical compared to the global financial crisis of 10 years ago".
Market prices are now reflected in developed markets. Wall Street extended a landslide in a sixth session Thursday amid fears of the trade war.
The United States and China have imposed tariffs equivalent to hundreds of billions of dollars of reciprocal merchandise in recent months.
The tariffs stem from the Trump administration's requests to China to make drastic changes to its intellectual property practices, to limit subsidies to advanced technologies, to open its markets to greater foreign competition and to take steps to reduce the trade surplus of US goods trade.
China on Friday announced an unexpected acceleration of export growth in September and a record trade surplus of $ 34.13 billion with the United States.
COMMERCIAL INTERVIEWS IN CHINA MUST INCLUDE YUAN: MNUCHIN
In an interview with Reuters, US Treasury Secretary Steven Mnuchin told the head of China's central bank that monetary issues should be part of any future trade dialogue between the two countries and worried about the weakness recent yuan.
Mnuchin also said China needed to define concrete "measures to be taken" to rebalance the two countries' trade relations before the resumption of negotiations to resolve their differences.
The head of the US Treasury and the governor of the People's Bank of China, Yi Gang, discussed the issue of currency on the sidelines of meetings in Bali.
Mr. Mnuchin's comments on the Chinese currency arrive ahead of the planned release, next week, of a much-awaited treasury report on currency manipulation, the first since the significant weakening of the yuan that began this spring.
At the same time, the chairman of a meeting of financial leaders from the group of 20 major industrialized and emerging economies admitted that trade tensions within the group could only be resolved by the countries directly involved.
"The G20 can play a role in providing a platform for discussion. But persistent differences should be resolved by members who are directly involved in the tensions, "said Nicolas Dujovne, Argentine Treasury Minister, at a press conference after the presidency of the G20 meeting in Bali.
More than 19,000 delegates and other guests, including ministers, central bankers and some leaders, attended IMF and World Bank meetings. Widodo asked them to "protect the impacts of trade wars, technical upheavals and market turbulence".
"I hope you will do your part to push our various leaders in the right direction," said Widodo, adding that "confrontation and collision impose a tragic price".
The IMF's bi-annual report on the Asia-Pacific region, released on Thursday, warned that the defeat of emerging market economies could worsen if the Federal Reserve and other major central banks tighten monetary policy faster than expected.
In Friday's plenary session, IMF Managing Director Christine Lagarde said the escalation of current trade tensions could reduce global GDP by nearly 1 percent over the next two years.
The IMF's forecast for global economic growth for 2018 and 2019 has been reduced to 3.7 percent from 3.9 percent in its July forecast.
"It's clear that we need to defuse these differences," Lagarde told the plenary.
Additional reports by David Lawder, Gayatri Suroyo and Yawen Chen; Edited by Simon Cameron-Moore
