KUALA LUMPUR: Trade wars will not benefit any country in the long term, says International Monetary Fund (IMF) managing director Christine Lagarde.
She said a trade war, despite offering a seemingly “short-term fix’ which looks like a great opportunity for certain countries, would not necessarily develop into a long-term benefit with regards to expenditure and foreign direct investments, among others.
“We are concerned that trade tensions could actually have a significant impact on global growth, we fear a reduction of 0.5 per cent of global growth in 2020 as the result of a 25 per cent tariff increase on all the trade relating to the US and China.
“Given the slow growth that we have observed this year, we hope that growth would not be reduced as a result of trade tensions,” she told a joint press conference with Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus in conjunction with her two-day visit to Malaysia here today.
Lagarde said that trade wars or trade tensions are never associated with increased wellbeing for the people or additional growth numbers, but instead spark unpredictability and uncertainties for global economies.
She said as a result of trade wars, investors would not invest and traders would not trade, while consumers would not consume.
Lagarde, who will be representing the IMF at the G20 conference in Osaka, Japan next week, said that any positive move towards resolving the current trade tensions between the US and China will certainly be good news for the global economy.
She said that IMF was pleased to see that Malaysia’s 2019 budget has returned to fiscal discipline, as stated in the IMF’s 2019 Article IV Consultation report, noting that the country is rebuilding buffers, just in case there are rainy days ahead.
Later today in her scheduled meeting with Tun Dr Mahathir Mohamad, Lagarde said she will be exchanging views and compare notes with the prime minister concerning anti-corruption and the government agenda, among others.
“I have been most impressed by recent developments in the Malaysian economy.
“As I said earlier today at Universiti Malaya, Malaysia’s economy would be unsuccessful unless it is as tasty and rich as laksa, with additional ingredients including governance, the fight against corruption, as well as higher and better education,” she added. – Bernama