IMF blames Trump’s trade policy for economic slowdown — not the Fed
By Heather Long April 3 at 10:28 AM
The International Monetary Fund calls this a “delicate moment” for the global economy as many countries are in the midst of a slowdown. Resolving President Trump’s trade war and Brexit could go a long way toward preventing a deeper slowdown, the IMF said.
In 2017, Trump’s first year in office, 75 percent of the world economy experienced an upswing, a moment of synchronized prosperity that resulted in one of the best years in global growth since the world was coming out of the Great Recession. This year, the IMF expects 70 percent of the global economy to experience a slowdown.
The global economy has “lost further momentum” since January, said IMF Managing Director Christine Lagarde on Tuesday. “This is a delicate moment that requires us to ‘handle with care.’ This means that we must not only avoid policy missteps, but also be sure to take the right policy steps.”
Lagarde said growth has been slowing largely because of Trump’s trade war and financial tightening last year. But she went on to say that the U.S. Federal Reserve has reversed course in a way that will “benefit” the world economy. The Fed no longer plans any interest rate increases this year, and it is ending its asset reduction, which Trump and Wall Street wanted. That leaves Trump’s tariffs and Brexit as the major factors weighing on the world economy, the IMF said.
In new research released Wednesday, the IMF found that focusing on bilateral trade deficits, as Trump has done with China, is useless because erecting trade barriers against one country such as China typically results in the United States importing more from other nations. It is also a drag on global growth as businesses have to figure out new supply chains, and countries that are not as adept at producing products have to beef up production.
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http://www.washingtonpost.com/business/2019/04/03/imf-blames-trumps-trade-policy-economic-slowdown-not-fed/?utm_term=.d6987a8dfef5
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