Azevêdo urges finance ministers to take coordinated steps to address economic imbalances
Meeting with finance ministers and Central Bank presidents from around the world at the IMF and World Bank Spring Meetings in Washington DC on 13 April, Director-General Roberto Azevêdo warned that the global imbalances driving current trade tensions can only be addressed by coordinated action. He cautioned that responding through trade policy measures alone would not solve these imbalances, but would likely make the problem worse.
The Director-General provided a summary of the WTO view on trade and economic growth, telling ministers that with global GDP slowing, trade was also slowing from the progress made just two years ago. After growing at 4.6% in 2017, trade growth is now expected to slow to 2.6% in 2019. The WTO examined all the possible reasons for this deceleration and the common view among economists is that increased trade tensions are a critical factor in the slowdown. Rising tariffs and increased uncertainties around trade are making investors more cautious, according to WTO economists.
The Director-General told ministers that global imbalances are core drivers of current trade tensions as many countries have carried long term large current account surpluses while others have had long term deficits. Increasingly trade and trade policy is being used to try and address these imbalances, but there are better policies that countries could use, he argued, such as stimulating domestic demand in surplus countries which would help reduce these imbalances.
Another factor behind current trade tensions, the Director-General said, is the political pressure that policy-makers face to create jobs. The loss of jobs in traditional manufacturing has sparked intense pressure to generate employment in industrial sectors of the economy. Today’s structural imbalances are concentrated in manufacturing goods and job losses in those sectors are predominately driven by new technologies and increased productivity, he said.
DG Azevêdo argued that the use of trade policies is actually exacerbating tensions instead of diminishing them, by creating surpluses in global markets in manufacturing sectors. Overcapacity is already evident in some sectors like steel, but other sectors may be suffering the same problem if policies that artificially stimulate production continue.
The Director-General said:
“To diminish these tensions, I suggest that countries sit down, look at all of these policies and the big picture impacts and begin to take coordinated actions to decrease the imbalances and not aggravate them.”
DG Azevêdo invited the finance ministers to look at the costs of their own domestic policies and the costs to the global economy. He assured ministers that the WTO will increasingly try to promote this conversation. In addition, the Director-General told ministers that countries should be looking at how to create jobs in services and other more dynamic sectors with more potential for job growth. He urged ministers to consider policies that would help create human capacity in the dynamic sectors of the economy where workers are needed.
Source: wto.org
Pages: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239