Leaders of the biggest financial organizations of the world have made their discontent clear about the US-China trade war and stated clearly the impact of ongoing trade tensions.
With the end of the talks in Bali, prominent finance heads from around the world sent out a strong message emphasizing on damage on the world economy by ongoing trade tensions and the imperative need to resolve these issues. Haruhiko Kuroda, the governor of the Bank of Japan stated that having constructive dialogue on trade is absolutely essential. Ilan Goldfajn, the president of the Central Bank of Brazil also stated that trade tensions were the biggest threat to the growth of developing economies.
The general manager of the Bank of International Settlements, Agustin Carstens put forth the view that global leadership that endorses protectionism, pushes the progress of the global economy backward. In addition, the governor of the People’s Bank of China, Yi Gang said that constructive solutions for trade disputes were the need of the hour. He also stated that China was prepared for the trade tensions to continue for a long period of time, despite the significant risks arising from the trade tensions.
The stand from China also received support from the former President of Mexico, Ernesto Zedillo, urging China to follow the lead of Mexico and Canada to hold strong against trade issues in negotiations from the U.S. The managing director of the International Monetary Fund, Christine Lagarde also put forth her support for the message, stating that the IMF was firmly behind the idea of reducing the trade tensions.
These messages came through as the annual meets for the World Bank and IMF ended. The advisory panel from the IMF stated, that if tensions did not come down, the recovery of the global economy would be highly uneven, and risks to the global market would go up significantly. In the light of widespread geopolitical and trade tensions, the future of global expansion does not look bright.
The heads of finance also warned of the negative impact arising from the market’s volatility and rising interest rates. The Federal Reserve’s policy to push up interest rates is not expected to be conducive for emerging economies. Perry Warjiyo, the governor of Indonesia’s Central Bank emphasized on the need for multilateral responses and improved synchronization to safeguard against the impact of protectionism.
Emerging economies should not work against normalization, as incremental steps can help protect against sudden changes in the future. At present, there seems to be hardly any prospect to the end of the US China trade war.