IMF warns of ‘dark clouds looming’ as economic optimism ENDS

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[Trumpian protectionism rampant. The global economy has peaked and a downturn in 2018 is inevitable according to a new index and the IMF’s Christine Lagarde who has warned of an "inexcusable, collective policy failure." *RON*]

David Dawkins, The Express, 16 April 2018

Christine Lagarde: Policymakers can't afford to stand still

As the International Monetary Fund prepares to reveal its semi-annual health check of the world economy this week, the noises coming from the Washington-based body of 189 countries are not as positive as they were six months ago. Investors are believed to fear that global growth is now starting to stutter after 2017- 2018 saw the best acceleration since 2011.

Christine Lagarde told an audience in Hong Kong last week that the rules that underpin global trade were “in danger of being torn apart” by protectionist forces in what the IMF managing director said would be “an inexcusable, collective policy failure”.

She is most concerned over the tariffs on imported steel and aluminium which were then followed by US action specifically targeting China.

Alluding to the tariffs, Ms Lagarde warned that although “the current global picture is bright… we can see darker clouds looming.”

The IMF has fired warning after warning in the 16 months since Donald Trump won the US presidency. However, over the past three months, President Trump has started to act on his tough talk and Ms Lagarde is worried that Washington and Beijing will spark a trade war that triggers a global protectionist culture not seen since the 1930s.

Speaking at the University of Hong Kong, Ms Lagarde warned of the rapid rise in public and private debt around the world and the prospects of a trade war.

She said: “The multilateral trade system has transformed our world over the past generation. But that system of rules and shared responsibility is now in danger of being torn apart."

GETTY Trade tension: President Trump has raised concern over trade tariffs with China

The IMF’s view is supported by a new tracking index compiled by the Brookings Institution think-tank and the Financial Times.

After a spell of disappointing business surveys across the world coupled with weak industrial data, confidence amongst leaders that 2018 would be the best year of the decade has now crashed.

The new index tracks indicators of so-called real activity - financial markets and investor confidence for both the global economy and for individual countries.

The FT report that in advanced economies the index has dipped because, although investment and productivity were strong in 2017, wage growth remains weak in most economies.

Oxford Economics has similarly warned that an all-out trade war would lead to “pronounced” slowdown for the world economy, with 0.5 percent being slashed from worldwide growth.