A call for the fast resolutions of the ongoing trade spats and tensions between countries and supporting of the process of bringing in reforms to the World Trade Organization was given by the International Monetary and Financial Committee (IMFC), the policy-setting body of the International Monetary Fund (IMF).
Growth outlook is “highly uncertain and subject to elevated downside risks” which includes the ongoing trade tensions, uncertainty over policy making and geopolitical risks even as there is shrinking scope for policy changes, increasing debt levels and increased financial vulnerabilities, the committee said in a communique released after the 40th meeting of the IMFC.
“Free, fair, and mutually beneficial goods and services trade and investment are key engines for growth and job creation. A strong international trading system with well-enforced rules addressing current and future challenges would support global growth,” the IMFC said in the communique.
“To this end, we recognize the need to resolve trade tensions and support the necessary reform of the World Trade Organization to improve its functioning,” it said.
Global trade and the global economy is being adversely affected by the trade tensions, said Lesetja Kganyago, the IMFC chairman and governor of the Reserve Bank of South Africa, in a press conference. “There cannot be winners in a trade war. In the end, the biggest loser is going to be the global economy.”
Cleary construction of the “cost consequence chain” form the trade tensions to uncertainty, to the depression of investment to a slowdown in economic growth to the possibility of elimination of jobs and to an erosion of consumer confidence, was made at the IMFC meeting, said IMF Managing Director Kristalina Georgieva at the press conference.
Georgieva said that he believes that a very strong echo has been made in the room about a consensus that policymakers, because of enlightened self-interest, need to very seriously consider their mandate to foster and further international cooperation in trade.
“We will cooperate to reduce excessive global imbalances through macroeconomic and structural policies that support sustainable global growth,” the IMFC also said in the communiqué.
The IMFC communiqué further said that work is being done by many countries together to create and implement a modern and globally fair international tax system – in particular the process of taxing the companies in the digital industry, while also trying to tackle the issue of harmful tax competition, artificial profit shifting, and other challenges to taxation.
(Adapted from XinhuaNet.com)