Trade war: Lagarde warns against harming trade, investment


IMF Chief, Christine Lagarde, on Thursday said governments must take care, even when there are disagreements, to avoid harming trade and investment which have been key drivers of the global economic recovery.

Amid concerns that escalating trade tensions between the United States and China could reverberate through the world economy, Lagarde urged the sides to resolve their disputes through dialogue.

“Investment and trade are two key engines that are finally picking up. We don’t want to damage that,” she said at a press briefing to open the spring meetings of the International Monetary Fund and World Bank.

Lagarde said finance officials from member governments would discuss the trade disputes that she said threatened to hurt many interconnected economies.

While she acknowledged “the actual impact of growth is not very substantial when you measure in terms of GDP,” the dispute can erode business confidence very quickly because of the uncertainty, which would make businesses “reluctant to invest.”

She said, “International cooperation has served us so well and delivered more progress for more people than at any time in history, but is now being questioned.”

While she welcomed bilateral discussions between Washington and Beijing, she said disagreements should be resolved in a multilateral forum, and every country should address its own trade barriers.

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