Christine Lagarde, the managing director of International Monetary Fund, IMF, has warned that clouds accumulating on the horizon of the global economy are “getting darker by the day” amid the threat of a trade war and tit-for-tat tariffs.
The comments came after Trump left the G7 summit early calling Canadian Prime Minister Trudeau “dishonest and weak,” argued with leaders on trade and refused to sign a communique with them.
“The clouds on the horizon that we have signalled about six months ago are getting darker by the day, and, I was going to say, by the weekend,” Lagarde said in Berlin on Monday at a news conference, Bloomberg reported.
Although Lagarde didn’t mention Trump name she spoke about the rising tensions and the challenges being made to the international trade regime which the IMF is designed to maintain.
World Trade Organisation director, General Roberto Azevedo, also voiced his concerns at the Berlin meeting.
“The rising trade tensions that we see before us, they risk a major economic impact, undermining the strongest sustainable period of trade growth since the financial crisis,” he said, adding: “We must therefore stop this escalation of tensions. A tit-for-tat process is not going to be helpful.”
The IMF has projected the global economy will grow by 3.9% this the year and next, the fastest pace since 2011. But following that, the forecasts are less positive as US interest rate hikes and a slowdown in the Chinese economy are expected to bite.
Lagarde has used similar terms before. On April 19 2018 she said “dark clouds” were accumulating as a result of tensions and global debt which she said hit a record of $164 trillion, with the advanced economies seeing the highest levels of debt since World War 2.
On Monday she said the “biggest and darkest cloud” over the global economy is the risk of eroded confidence “by attempts to challenge the way in which trade has been conducted, in which relationships have been handled, and the way in which multilateral organizations have been operating.”