Trade Uncertainty Officers look at World's Largest Economic Risk

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WASHINGTON – A new head of the International Monetary Fund urged policymakers this week to take steps to boost the slow-down global economy and ask the people who decided to follow its recommendations.

Many hands didn't go up.

In recent public interviews and events, finance ministers and central bankers who gathered in Washington for IMF meetings said that the biggest risks to the global economy are the uncertainties and divisions of trade among the nations on how they are to reduce.

Global economic growth has grown steadily this year since the recession of 2009, the IMF said. The trade war between the US and China is the main reason for the malaise, which the fund considers it left a Swiss hole in the global economy. Increasing tariffs between the US and China have affected supply chains, reduced investment and financial markets, reduced global output by 0.8%, or about $ 700 billion, this year and next – equivalent to the Alpine's annual gross output.

While the IMF has a relatively small forecast in 2020, it also highlighted the risk of growth again. The fund said that the largest economy in the world – the US, China and Japan – is likely to decline further next year.

Managing Director of the IMF

Kristalina Georgieva

on Thursday, he proposed 189 member countries of the fund to work together to strengthen the economy. It recommended that governments use different measures to stimulate their economies in the long term, such as improving education, cutting bureaucracy and combating corruption. But at the top of its list of short-term measures was the easing of trade tensions.

“We want our shareholders, for their own sake, to seek ways in which we can strengthen the co-operation and dynamics of the world economy,” said Ms. Georgieva's first news conference since the post was taken this month. “Our message is [] to focus on clear and sustainable agreements on the future of trade.”

But such a consensus cannot be found.

President Trump has repeatedly criticized multilateral cooperation as a deterrent to the interests of the United States. Last year, tariffs applied to steel and aluminum imports from long-term European alliances, citing national security concerns, and since then Chinese imports have been charged almost $ 360 billion.

A number of policymakers who visited the U.-China trial trade break last week, said it did not hold key data and reminded events that occurred in the past further tariff progress.

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“It seems to me that it repeats a story we have seen a few times over the past few years,” Governor of the Italian Bank

Ignazio Visco

said in an interview. “It is very difficult to understand if there is a strategy or a set of actions, some of which have not been considered very well or are not co-ordinated.”

Zhu Min,

The chairman of the National Institute of Financial Research at Tsinghua University of China, said it is not certain that both countries will be able to permanently deal in the short term.

“In Washington, things change very quickly, like the weather,” said Mr Zhu. “The ball is in the US court. I think that's very clear. ”

Since three-quarters of the economic impact from the war was indirect trading – arising from lower confidence and investment rather than reduced trade flows – economists say it is likely to take more than simple tariffs to make a full recovery.

Policy makers also expressed the decision of the Trump administration this week to impose tariffs on European goods to the value of € 7.5 billion as a sign that trade tensions might deteriorate before they are mitigated. While Aerbus was granted the World Trade Organization case tariffs for which European Union subsidies were involved, the German bank chief, the Spanish Economy Minister and the French Minister for Finance said that there could be a full trade war. between the US and the EU as a result of the duties.

“When you have a gun on your head, you have no choice but to say we revoke and never negotiate,” said French Finance Minister

Bruno Le Maire

reporters said Friday. “We are very proud of the politics that threatens, threatens, threatens you, every day.” T

Since the US exports to Europe more than China, economists say that such a dispute could be more harmful than the Washington-Beijing conflict.

The current environment contrasts with the international co-operation seen during the recent recession, when finance ministers and central bankers around the world coordinated their efforts to promote liquidity in the financial system and demand from consumers and businesses. reopening.

“It is a very different world from the world that has supported the growth of a former barrister in the past 70 years,“ a diverse world of great competitive and uncooperative powers, which is similar to the purpose stated by the Trump administration… ”

Maurice Obstfeld,

former chief economist at the IMF. “There may still be considerable scope for such multilateralism avoided by the United States, but it will be incomplete and fragmented multilateralism compared to what we had.” T

Write Paul Kiernan at paul.kiernan@wsj.com

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