Mnuchin urges International Monetary Fund to enhance FX surveillance
- Author: Anthony Vega Apr 24, 2017,
Apr 24, 2017, 1:44
Global finance leaders are defending globalization against an assault from President Donald Trump and European populists. The IMF in particular has sounded warnings against Trump´s plans to shrink US trade deficits with potential measures to restrict imports, arguing in its latest economic forecasts that protectionist policies would crimp global growth that is starting to gain traction.
Speaking a little earlier, World Bank President Jim Yong Kim said he is "encouraged" to see stronger economic prospects after years of "disappointing" global growth.
The IMF reported this week that the world economy will expand 3.5 percent this year, up from 3.1 percent in 2016 and a sign that it is escaping a long period of lackluster growth that Lagarde once lamented as "the New Mediocre". "If we can grow the USA economy, that's not just good for the USA worker, that's good for worldwide growth and it creates opportunities".
And facing political risks to business confidence and output in Europe and Asia, global finance chiefs attending the International Monetary Fund and World Bank spring meetings in Washington last week were ready to smooth over conflicts with the leaders of the world's largest economy.
The Trump administration had a simple but stark message for world financial leaders who gathered in Washington on Thursday amid worries about rising USA protectionism: fair trade means tit-for-tat tariffs. Lagarde is set to interview Mnuchin on stage during the meetings.
He said the administration's goal was to make trade more fair and was not aimed at erecting protectionist barriers: "The United States is probably the most open trading market there is".
Trump tapped into a rising backlash against free trade during the campaign, pledging that he would impose punitive tariffs of up to 45 percent on countries such as China and Mexico which he blamed for pursuing unfair trade practices that were hurting American workers.
The US tax code is "way, way, way too complicated", and simplification is a key part of Trump's economic plans.
Mnuchin suggested that the tax plan would not be revenue-neutral.
Lagarde says trade is one of the "pillars" of prosperity.
Mnuchin called the IMF's outlook for the United States economy a "little conservative" as he repeated Trump's goal of getting to growth of 3 per cent or more. That inclusiveness needs to be identified and supported by policies on three dimensions: "within countries, across countries, and between generations", she said. Since taking office, Trump has pulled the United States out of a 12-nation Pacific trade agreement negotiated by the Obama administration and just this week ordered the Commerce Department to speed up an investigation into whether steel imports posed a national security threat.
The IMF will cooperate with the USA, despite President President Donald Trump's proposed protectionist policies to promote global trade, Managing Director Christine Lagarde said Thursday. He said the biggest factor in the job losses was increased automation. "We're meeting at a time when we face several overlapping crises, both natural and man-made, all of which add urgency to our mission", Kim said.