Protectionist 'sword' hangs over firming growth — IMF's Lagarde
- Author: Wendy Palmer Apr 13, 2017,
Apr 13, 2017, 1:46
In her prepared remarks, Lagarde gave a preview of next week's spring meetings in Washington of the 189-nation International Monetary Fund and its sister lending organization, the World Bank.
According to the study, emerging market and developing economies are likely to experience a weaker growth from external conditions than in the past, in view of the slow economic recovery from the global financial crisis, increasing the risk of protectionism in advanced economies and the tightening of monetary policy in the US.
The report also acknowledges that while bilateral and regional trade deals have a role to play, a strong global trading system based on the WTO is critical: "Strong, well-enforced trade rules help to promote competition and to reassure citizens that worldwide trade is evenhanded", it says.
After their meeting, Merkel said she hoped for continuity when it came to policies in areas such as trade and climate change, despite growing protectionist tendencies worldwide.
IMF Managing Director Christine Lagarde says that there is a critical need for more worldwide cooperation, not less.
But, drawing on recent research, they admit that those who lose out in global competition can be hit harder and suffer longer than previously understood.
It noted that "adjustment to trade can bring a human and economic downside that is frequently concentrated, sometimes harsh, and has too often become prolonged". The organizations want countries to make it easier for people to switch careers or move where jobs are and in some cases to provide insurance for lost wages.
The institutions cited research finding that manufacturing regions that were more exposed to imports from China since about 2000 saw "significant and persistent losses in jobs and earnings, falling most heavily on low-skilled workers".
It added that technology was twice as important as globalisation in reducing labour's share of income, but said the ability of firms to outsource production to lower-cost countries had eroded workers' bargaining power.
The IMF sees a more favorable outlook for the global economy this year and next than in 2016, but it has concerns beyond the near-term, IMF Managing Director Christine Lagarde said. For this year's forecast, WTO Director-General Roberto Azevedo set a range of between 1.8 percent and 3.6 percent depending on factors including the interest rate environment, fiscal policy, the results of upcoming elections, and the level of appetite for more protectionist or anti-globalization policies.