MUSCAT: The International Monetary Fund (IMF) on Tuesday called on the Group of 20 major economies to work together to preserve the benefits of trade and avoid protectionism, while also urging them to reduce external imbalances and halt policies that distort global trade.
Under pressure from rising protectionist sentiment in many advanced economies, including the United States, the IMF said that international cooperation was needed to maintain trade as an engine of growth that has lifted millions out of poverty worldwide.
In a “surveillance note” outlining its view of prospects and risks to the global economy issued ahead of a G20 finance ministers meeting this week in Baden-Baden, Germany, the IMF appeared to try to balance stronger demands for fairer trade with its traditional calls for more globalisation.
It said those countries with trade and current account surpluses needed to work with deficit countries to reduce these imbalances. A strong commitment to rules-oriented trading system was “vital” and protectionist measures as well as national policies that distort trade and investment.
“Above all, we should collectively avoid self-inflicted injuries,” IMF Managing Director Christine Lagarde said in an accompanying blog post. “This requires steering clear of policies that would seriously undermine trade, migration, capital flows, and the sharing of technologies across borders. Such measures would hurt the productivity, incomes, and living standards of all citizens.”
New US Treasury Secretary Steven Mnuchin, who will make his G20 debut in Baden-Baden, will be “pushing hard” for US interests at the meeting, including for the group to reaffirm past commitments to avoid competitive currency devaluations, a senior Treasury official said on Monday.
The Trump administration has pledged to reduce US trade deficits with countries such as China, Germany and Mexico, and is looking to harness the G20 and other international institutions to help further those goals, administration officials have said.
Despite the IMF’s concern over reversions to nationalist economic policies, the IMF said that the global economic outlook was improving, thanks in part to an upturn in global manufacturing and trade flows.
