The engines of global growth are humming. The International Monetary Fund is projecting 3.9 percent growth for this year and next. However, the IMF’s economists are casting a shadow over their own forecasts – the possibility of a trade war between China and the United States.
CGTN’s Daniel Ryntjes reports.
“If we get into a cycle of very widespread actions and counteractions, we would begin to see significant economic effects, that would be, whether you call it trade war or not, very worrisome,” IMF Director of Research, Maurice Obstfeld said.
The IMF sees related risks emerging from the recent U.S. corporate and personal tax cuts. They see just a short term boost leading to higher interest rates and rising debt which in turn exacerbates global trade imbalances.
The prescription from the IMF is to focus instead on policies to expand the benefits of globalization to those who have been excluded, using long-term pro-growth policies, like education and training in high technology.
“At the IMF, we’ve been saying for a while now that the current cyclical upswing offers policymakers an ideal opportunity to make longer term growth stronger, more resilient and more inclusive,” added IMF Director of Research, Maurice Obstfeld. “The present good times will not last for long. But sound policies can extend the current upswing while reducing the risks of a disruptive unwinding.”
For now, the IMF is calling the current tough trade talk initiated by U.S. President Donald Trump a ‘phony war’, but one which could still escalate. So policymakers gathering here for these Spring Meetings of the IMF and World Bank are making the case that multilateral institutions can help countries negotiate their differences in order to avoid a trade war in which everyone would lose out.
Florence Jaumotte talks about the benefits of technology diffusion
CGTN’s Rachelle Akuffo spoke with Florence Jaumotte, deputy division chief at the IMF about the benefits and developments in technology diffusion.