Finance ministers for developing nations in Group of 24 call for major economies to reform global trading system. PHOTO: REUTERS
Formally launching the IMF and World Bank annual meetings on the Indonesian resort island of Bali, Lagarde urged countries to "de-escalate" trade conflicts and fix global trading rules instead of abandoning them.
The United States and China have slapped tit-for-tat tariffs on hundreds of billions of dollars on each other's goods over the past few months, rattling financial markets as investors worry that the escalating trade conflict could knock global trade and investment. The tariffs stem from the Trump administration's demands that China make sweeping changes to its intellectual property practices, rein in high technology industrial subsidies, open its markets to more foreign competition and take steps to cut a $375 billion US goods trade surplus.
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Share markets in Asia plunged to a 19-month low on Thursday after Wall Street's worst losses in eight months led to broader risk aversion, partly due to the heated global trade tensions as well as rapidly rising dollar yields. "We certainly hope we don't move in either direction of a trade war or a currency war. It will be detrimental on both accounts for all participants," Lagarde told a news conference. "And there would also be lots of innocent bystanders," including countries that supply commodities and components to China, such as Indonesia.
Finance ministers for developing nations in the Group of 24 whose economies have been battered by stormy markets urged major economies to reform the global trading system, rather than discard it. The G24 statement, issued on the sidelines of the meetings, said all emerging markets were "adversely affected" by excessive capital flow volatility.
On the other hand, the IMF and Pakistan on Thursday launched talks on a new bailout program aimed at easing a mounting balance of payments crisis in the South Asian country. The IMF and World Bank meetings, attended by more than 19,000 delegates, showed no sign of disruption from an offshore earthquake early Thursday morning between Bali and Java Island that killed three people.
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