In the speech in
Trump has threatened to slap tariffs as high as 45 percent on goods from
Resorting to protectionism, Lagarde said, would disrupt supply chains for domestic companies and inflate prices that companies and consumers must pay. A better approach would be for countries — both those with trade surpluses and those with deficits — to cooperate in pursuing policies to address the imbalances.
“Cooperation means working together to ensure that countries observe a level playing field,” Lagarde said.
Next week's finance meetings will likely be dominated by debate over how the global financial system should respond to trade and other economic proposals being pushed by the new Trump administration.
In an interview with Bloomberg television, Lagarde cautioned against any move by
Lagarde said a better approach would be to conduct currency assessments in a “cohesive manner.” She noted that the
In her speech, Lagarde said next week's meetings will occur at a time when prospects for the global economy are improving after struggling for six years to emerge from the severe downturn triggered by the worst financial crisis since the 1930s.
“After six years of disappointing growth, the world economy is gaining momentum as a cyclical recovery holds out the promise of more jobs, higher incomes and greater prosperity going forward,” Lagarde said in her appearance at Bruegel, an economic research institute in
She pointed to stronger manufacturing activity in advanced economies and robust gains in emerging economies, which she said will provide more than three-fourths of expected global growth in 2017.
One of the reasons for optimism is a rebound in the price of commodities which have brought relief to many low-income countries.
“Putting all this together, we see a global economy that has a spring in its step,” Lagarde said, while cautioning that downside risks remain.
She said that in addition to the threat to trade from rising protectionism and political uncertainty in
Lagarde said that if productivity had grown since 2008 as it had been before the financial crisis, economic output in advanced economies would be 5 percent higher today — the equivalent of adding a country with output larger than
Lagarde said that nations must find ways to reinvigorate productivity, such as investing more in education and infrastructure and providing tax incentives to foster research and development.