Central bankers and finance officials gathered in Indonesia for this week’s Annual Meetings of the International Monetary Fund and World Bank group are pointing to trade as an important engine of growth and are urging leaders not to apply the brakes through protectionism.
IMF Managing Director Christine Lagarde hosted a panel of senior trade officials and experts on globalism to discuss growing trade tensions that the Fund has identified as a risk to the global expansion.
“Trade wars are stupid. Trade wars are not something easy to win. Trade wars are very difficult to fight and they impoverish everybody. They are a major risk to world growth. This is why we cannot accept protectionism as an issue. We must stick to the multilateral order. Of course, we must fix it,” said Pierre Moscovici, EU Commissioner for Economic and Financial Affairs, Taxation and Customs.
Panelists said tariffs and retaliatory tariffs threaten to hurt poor and working-class people, rather than help them.
World Trade Organization Director-General Roberto Azevedo said trade tensions have already had an impact.
“Trade expansion, we were expecting this year our first estimate was about 4.4 percent. We already revised it down to 3.9. Next year it was going to be 4. Now we revise it down to 3.7. And I hear it sometimes people saying, ‘Well, all these things are happening but the economy is still good. Of course, it’s still good because the impact is not there yet. There is a delay between the moment that you introduce these measures and when they’re actually affecting the economy. And, I think we may see more of that kind of impact in the future if we don’t do anything about it,” said Azevedo.
Azevedo and Moscovici urged leaders to value existing institutions and work to de-escalate their trade disputes.
“Some say that Europe is the problem. I say that Europe is a solution. Some say that multilateralism is a problem. Multilateralism is a solution. But, to convince from that, we need to have a better Europe and a better multilateralism,” said Moscovici.