International Monetary Fund Nods Towards Slowdown in Global Growth

Christine LagardeOn Thursday, the International Monetary Fund (IMF) called on G20 leaders to take much more furtive efforts for boosting demand, reviving flagging trade, and encourage long-delayed structural reformation to each of their respective economies and to share more growth across the board.

The IMF said that from their own research they were able to determine that goods and services trade volume growth is at an elevated risk of stalling if there is no intervention to prevent it.

According to IMF managing director Christine Lagarde, “The political pendulum threatens to swing against economic openness, and without forceful policy actions, the world could suffer from disappointing growth for a long time.”

In their G20 report, the IMF said, “High frequency data points to softer growth this year,” adding, “These developments threaten to open another negative dynamic, in which political action fails to deliver the structural reforms needed to lift growth and instead turns toward inward-looking assaults on free trade.”

The IMF details that over the past several years, export and other industry pressures—in addition to China’s leadership—is keeping labor production at bay, resulting in lower prices and aggravating trade relationships across the globe.

The report goes on to say, “While three-fourths of this drop can be traced to weaker economic activity, notably weak investment, the waning pace of trade liberalization and a recent uptick in protectionist measures have added to the downward momentum. Such reductions in global trade can feed back to lower GDP growth.”

Lagarde goes on to warn that it might be easy to blame trade troubles for any of the problems facing any of the G20 countries but “curbing free trade would be stalling an engine that has brought unprecedented welfare gains around the world over many decades.”

She also notes that if we want to make trade work for all parties, those who make the policies should improve efforts to retrain, build skills and assist in occupational and geographic mobility among those most affected.

The agency also reported, however, that it views monetary policy as something that should remain accommodating to help keep inflation down. They also said that those countries which have the fiscal space should more forthright pursue necessary public investments in infrastructure as well as support more growth through the avoidance of direct tax increases increases on consumers overall.

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