The window of opportunity for safeguarding global growth is "narrowing" as trade disputes deepen and emerging markets face fiscal crisis, the IMF said Saturday, warning countries against worsening things by weaponizing currency and interest-rate policies.
US Treasury Secretary Steven Mnuchin had downplayed the global concerns expressed at an International Monetary Fund meeting held this week in Bali under the shadow of US-China tensions, saying the world would benefit if Beijing is forced to change its trade policies.
But the IMF said in a communique that while global growth currently remained "steady," the risks are "increasingly skewed to the downside amid heightened trade tensions and ongoing geopolitical concerns."
The Fund kicked off its annual meeting with the World Bank on the Indonesian resort island earlier in the week in a gloomy mood, preoccupied by the trade tussle between the world's two biggest economies, and tightening financial conditions faced by emerging markets.
On Tuesday, it cut its outlook for global GDP growth by 0.2 percentage points to 3.7 percent for 2018 and 2019, citing the trade war.
"The window of opportunity (is) narrowing," the 189-country organization said, adding that members would "refrain from competitive (currency) devaluations and will not target our exchange rates for competitive purposes" -- a line apparently aimed at the US and China.
Mnuchin this week said he had told the head of China's central bank about his concerns over the weakness of its currency.
US Treasury Secretary Steven Mnuchin addresses a press conference on the sideline of the IMF/WB Annual meetings in Nusa Dua, Bali on October 13, 2018. (Photo by AFP)
US President Donald Trump has accused Beijing of depreciating its currency to absorb the impact of US trade tariffs.
But Mnuchin, speaking on the Bali meeting's sidelines, declined to comment on whether Washington would declare Beijing a "currency manipulator" in a Treasury report due out next week.
That would be a first for China, triggering a process that could lead to punitive steps.
World markets also have been roiled by a plunge in some emerging market currencies -- including Turkey and Argentina -- as domestic financial crises and higher US interest rates lure returns-hungry investors to the dollar.
The IMF statement said it would push to improve the World Trade Organization and boost confidence in the global trading system.
It added that it would continue to help countries deal with the social and economic costs of "pandemics, cyber risks, climate change and natural disasters, energy scarcity, conflicts, migration, and refugee and other humanitarian crises."