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IMF Chief warns US-China trade war will weaken global economy

Syed Umarullah HussainiWeb Editor

10th May, 2020. 08:38 am
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Chief Executive

The International Monetary Fund IMF Chief has warned the US and China against rekindling a trade war that could weaken a recovery from the coronavirus pandemic.

IMF Chief Kristalina Georgieva, told that economy of United States has been particularly hard hit by widespread shutdowns aimed at containing the virus. US government data on Friday showed the unemployment rate surging to 14.7 percent last month. The White House said joblessness could hit 20 percent in May.

US President Donald Trump has threatened to punish China for its handling of the virus by imposing new tariffs, and on Friday suggested he could end a Phase 1 US-China trade deal.

Top US and Chinese trade officials said they would press ahead with implementing the initial trade deal, but some observers say China’s promised purchases of US goods are running far behind the pace needed to meet the first-year goal of a $77 billion increase over 2017 levels. Georgieva warned that a retreat into protectionism could weaken the prospects for a global recovery.

Georgieva said: “It is hugely important for us to resist what may be a natural tendency to retreat behind our borders.” Reigniting world trade was critical for a global economic recovery. “Otherwise,” she added, “costs go up, incomes down, and we will be in a less secure world.”

Earlier International Monetary Fund IMF advises United Kingdom and European Union to extend the period to negotiate a post-Brexit trade deal.

Media reports said Kristalina Georgieva The Managing director of International Monetary Fund IMF advises it would be wise to extend the period.

She said because of the “unprecedented uncertainty” arising from the pandemic it would be “wise not to add more on top of it”. “I really hope that all policy makers everywhere would be thinking about [reducing uncertainty. It is tough as it is, let’s not make it any tougher,” Furthermore Ms Georgieva said: “My advice would to seek ways in which this element of uncertainty reduced in the interests of everybody, the UK, the EU, and the whole world”.

The UK government chose to put into law a refusal to trigger provisions to extend the Brexit implementation phase beyond the end of the year. That means, without a deal, the UK and EU would trade on World Trade Organization terms, including significant new taxes and checks on trade, from the beginning of next year.

Earlier both the UK and EU announced a curtailed timetable to carry out three negotiation rounds by video conference. Ms Georgieva says she is now preoccupied with trying to find ways to help alleviate “a global recession we have not seen in our lifetimes”,The IMF chief, a former vice president of the European Commission, also heaped praise on the UK Treasury and Bank of England’s “early” and well-coordinated economic response to the crisis.

She said: “That very strong package of measures is helping the UK, but given the UK’s sizeable role in the world economy, it’s actually helping everyone”. The IMF is currently hosting a virtual version of its annual meetings with world finance ministers and bankers.

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