NUSA DUA / INDONESIA: The window of opportunity for safeguarding global growth is “narrowing” as trade disputes deepen and emerging markets face fiscal crisis, the IMF said on Saturday, warning countries against worsening things by weaponising currency and interest-rate policies.
US Treasury Secretary Steven Mnuchin had downplayed the global concerns expressed at an International Monetary Fund meeting held this week in Bali under the shadow of US-China tensions, saying the world would benefit if Beijing is forced to change its trade policies.
But the IMF said in a communique that while global growth currently remained steady, the risks are “increasingly skewed to the downside amid heightened trade tensions and ongoing geopolitical concerns”. The Fund kicked off its annual meeting with the World Bank on the Indonesian resort island earlier in the week in a gloomy mood, preoccupied by the trade tussle between the world’s two biggest economies, and tightening financial conditions faced by emerging markets.
On Tuesday, it cut its outlook for global GDP growth by 0.2 percentage point to 3.7% for 2018 and 2019, citing the trade war. “The window of opportunity (is) narrowing,” the 189-country organisation said, adding that members would “refrain from competitive (currency) devaluations and will not target our exchange rates for competitive purposes” — a line apparently aimed at the US and China.
Mnuchin this week said he had told the head of China’s central bank about his concerns over the weakness of its currency. US President Donald Trump has accused Beijing of depreciating its currency to absorb the impact of US trade tariffs.
But Mnuchin, speaking on the Bali meeting’s sidelines, declined to comment on whether Washington would declare Beijing a “currency manipulator” in a Treasury report due out next week.
That would be a first for China, triggering a process that could lead to punitive steps. Mnuchin also pushed back against the growing global angst over the US-China trade fight, saying that pressuring Beijing into adopting more open trade policies would be good for all.
Published in The Express Tribune, October 14th, 2018.