The leaders of the 189-nation International Monetary Fund and its sister organization, the World Bank, are laying out their visions for the future, hoping to achieve a world with less extreme poverty and more economic growth.
However, IMF Managing Director Kristalina Georgieva and World Bank President David Malpass will likely find their discussions over the next two days consumed with more immediate problems, such as rising trade tensions that have sapped world growth.
All the meetings, which are scheduled to conclude Saturday, are expected to be dominated by debate over the best way to cool rising trade tensions, which have seen the world’s two biggest economies, the United States and China, impose punitive tariffs on billions of dollars of each other’s exports.
The US-China trade war has had ripple effects that have contributed to a significant, synchronised slowdown across 90 per cent of the globe. Meeting with reporters, Georgieva said a tentative US-China trade agreement announced last week by President Donald Trump should lessen slightly the damage done by the trade war but until the two nations resolved their differences, it would not remove enough uncertainty to return the globe to solid growth.
Georgieva said the tariffs still being imposed would result in 0.6 per cent in lost global output by the end of 2020, down a bit from the 0.8 per cent in lost output the IMF had initially estimated.
But she said that result was not good enough and what was needed was for the United States and China to resolve all their trade issues and for all countries to work together to modernise the rules of global trade to lessen friction in the future.
Our hope is to move from a trade truce to a trade peace, she told reporters. The IMF released an updated economic outlook on Tuesday that projected global growth for this year at 3 per cent. That would be the weakest showing since a negative 0.1 per cent in 2009, in the wake of the worst financial crisis since the 1930s.
Georgieva, a Bulgarian economist who had held the No. 2 job at the World Bank, was tapped last month to take over at the IMF, succeeding Christine Lagarde. In her news conference, she said she hoped this week’s talks would focus on ways to ease trade tensions and begin the groundwork to update the rules of world trade. The Trump administration has repeatedly attacked the Geneva-based World Trade Organisation, saying it is biased against the United States.
“We have been reaching agreements on trade based primarily on the past,” she said. She noted that global commerce has been transformed in recent years by advances in technology, and those advances need to be acknowledged in new trade rules. Malpass, who took over as head of the World Bank earlier this year, said his focus for the meetings will be efforts to ensure that everything possible is done to restart global growth, given that the 700 million people living in extreme poverty one in 12 people on the planet will be the most harmed by a prolonged slowdown.
“There is urgency to what we’re doing because of the challenges facing development,” Malpass said. “Global growth is slowing, investment is sluggish, manufacturing activity is soft and trade is weakening.” In his announcement last week, Trump said he was suspending a tariff increase on $250 billion of Chinese products that had been scheduled to take effect this week.
Treasury Secretary Steven Mnuchin told reporters Wednesday that the US and Chinese negotiators were working to hammer out details on this “phase one” agreement.
He said he and US Trade Representative Robert Lighthizer would speak by phone with Chinese Vice Premier Liu He, the head of the Chinese negotiating team, next week and planned to meet with him in Santiago, Chile, before the Asia Pacific Economic Cooperation leaders’ summit on Nov. 16-17. It is expected that Trump and Chinese President Xi Jinping will meet at that summit to sign the initial phase of the deal, if it is finalised by that time. Mnuchin said the administration has made no decision yet on whether it will postpone 15 per cent tariffs on $160 billion in Chinese goods still due to take effect December 15.