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

Overnight chill falls short of Feb. 21 records

Icy temperatures across the Okanagan-Shuswap don’t beat lows set in 1910, 1894

Sicamous arena treating for ammonia

Testing ordered of public facilities following fatal leak at Fernie arena.

Vortex skaters set for Games

North Okanagan well represented in many sports for B.C. Winter Games in Kamloops

Semi loses wheel, causes collision

No injuries in collision east of Sicamous involving transport trucks

Young Salmon Arm athletes gear up for the 2018 BC Winter Games

20 competitors across five events vying for the podium in Kamloops

Your Feb. 21 Morning Brief

Check out the top stories of the day in the Okanagan-Shuswap with Carmen Weld’s Black Press Morning Brief.

How to keep local news visible in your Facebook feed

Facebook has changed the news feed to emphasize personal connections. You might see less news.

Driver rescued down 90-foot embankment along Coquihalla

Rope rescue conducted on mutual-aid call with Chilliwack SAR, Hope SAR and Agassiz fire department

Thief helps himself to cash register

Vernon business asking for public’s help to identify suspect

Slow speed head-on crash with police car

A vehicle crashed head-on into a police car in Kamloops this morning

BCHL Today: Merritt peaking at right time and Taylor signs with UNH Wildcats

BCHL Today is a (near) daily look at what’s going on around the league and the junior A world.

Day 100

Parkview Elementary student Myles Low shows off his hand-made eyewear celebrating the… Continue reading

Video: B.C. firefighters featured in quirky video

Oliver Fire Department posts video about their B.C. volunteer firefighter spring training seminar

OLYMPIC ROUNDUP: Two more medals push Canada into third place

A gold in ski cross and a bronze in bobsleigh as men’s hockey advances to the semis

Most Read