No winners in trade wars, IMF chief tells Malaysia

IMF managing director Christine Lagarde speaks at the G-20 high-level seminar on financial innovation ‘Our Future in the Digital Age’ in Fukuoka June 8, 2019. — Picture by Kiyoshi Ota/Pool via Reuters
IMF managing director Christine Lagarde speaks at the G-20 high-level seminar on financial innovation ‘Our Future in the Digital Age’ in Fukuoka June 8, 2019. — Picture by Kiyoshi Ota/Pool via Reuters

KUALA LUMPUR, June 24 — No winners will emerge from the ongoing trade wars and trade tensions despite nations seeking the best options for each other, said the managing director of the International Monetary Fund (IMF) today.

IMF’s Christine Lagarde highlighted how trade wars are never associated with increased wellbeing for the people or additional growth numbers, but instead sparked unpredictability and uncertainties for global economies.

Speaking today at a press conference together with Bank Negara Malaysia’s Datuk Nor Shamsiah Mohd Yunus, Lagarde expressed IMF’s worries of a dwindling global economy resulting from the ongoing trade conflict between the two economic powerhouses of the United States and China.

“Tension, trade wars are beneficial to none; without [certainty] investors generally do not invest, and traders do not trade and consumers do not consume.

“We are concerned that trade tensions could have a significant impact on global growth where the work that we have done at the IMF indicates that we fear a possible reduction of 0.5 per cent of global growth in 2020, as a result of the 25 per cent tariff increase on all the trade there is between US and China,” she said.

Concerning the upcoming meeting between US President Donald Trump and China’s President Xi Jinping at the G20 summit in Osaka, Japan, Lagarde said the IMF were hopeful and would welcome any positive resolutions from the talks between the two figures.

“What I can tell you, any positive move towards resolving the current trade tensions that we are seeing between the US and China, among others, will be certainly welcomed from the perspective of the global economy.

“And, given that the slower growth that we have observed this year, we certainly would hope that growth will not be further reduced as a result of trade tensions,” she said.

Lagarde also revealed IMF’s forecast of a 4.5 per cent growth for the Malaysian economy for 2019, lower than the 4.9 per cent growth projected by the Finance Ministry, saying the decline is attributable to ongoing the trade tensions.

“The downside risks that we have on the horizon, and Malaysia being part of the supply chain of many of the products that are covered by the tariff increase, it is only normal that this is happening,” she explained, referring to lower growth.

Lagarde also agreed with Prime Minister Tun Dr Mahathir Mohamad’s recent statement at the Asean Summit that trade between Asean countries should be boosted to encourage growth among each other in light of the trade disputes between US and China.

“In most regions of the world, we the IMF support better integration, regional integrations that are supportive of better trade that sees more trade and more joint projects, including infrastructure to actually be more conducive to improve trade.

“This region however diverse, however scattered it is geographically, can improve its intra-regional relationships,” he said, referring to Asean.

“I think it’s a strength you simply cannot ignore; [IMF] will be supportive and encouraging,” said Lagarde.