The world’s financial leaders vowed to work together to counter what the International Monetary Fund has called a “synchronized slowdown” of global economic growth.
The IMC’s policymaking body met in Washington on Saturday and issued a communique calling for reducing trade tensions while boosting cooperation to promote inclusion, and expand opportunities.
IMF Managing Directory Kristalina Georgieva said there are promising signs that the U.S. and China are seeking common ground.
“As we are all aware, there has been progress in discussions between China and U.S. and actually that was a topic that both countries very openly commented on and commented on in a very positive manner,” said Georgieva in a news conference after the meeting of the International Monetary and Financial Committee (IMFC).
She added that trade can’t flourish and drive growth if there is uncertainty.
“The issue is not just tariffs. The issue is do we have predictability for trade in the future. We know that this year trade slowed down to 1.2 percent. This is almost standing still.”
In the IMFC news briefing, Georgieva was asked about the impact of trade restrictions.
“What the meeting did was very clearly build the cost-consequence chain from trade tensions to uncertainty. From uncertainty to slowing down of investments. From there to reduction in growth. From there to potential erosion of jobs. From there to erosion of consumer confidence. We know that today in countries that are doing relatively well, the consumer sector is doing well but manufacturing is already feeling the impact of this slowing down of investment. Well, when follow this chain, what is the next shoe to drop. It would be consumer confidence.”
She said leaders understand the threat this poses and are getting on the same page.
“What we advanced was the understanding of what are the issues that need to be addressed and building more, if you wish, peer pressure for everybody to play by the trade rulebook and be willing to expand and improve this rule book.”
IMFC Chair Lesetja Kganyago said cooperation is the path to prosperity.
“There can’t be winners in a trade war. In the end, the biggest loser is going to be the global economy. And, in a way, when you think of trade protectionism, it’s actually so illogical. You want access to other countries’ markets but you don’t want them to have access to yours. And, when you talk about the global economy, the lifeblood of the global economy is actually global trade.”