NUSA DUA: Rising US interest rates, tanking emerging market currencies and a bitter US-China trade spat could push the world towards its next financial crisis but there is still time to avert disaster, global finance chiefs have said.
The world economy is still growing but faces an “unprecedented” combination of threats, the International Monetary Fund cautioned at an annual meeting with the World Bank in Bali this week.
Among them is growing protectionism championed by the Trump administration and the intensifying trade-and-currency battle between Washington and Beijing, which have imposed tit-for-tat tariffs on billions of dollars worth of goods.
Opening the Bali talks, Indonesian President Joko Widodo compared the dispute between the world’s two biggest economies to the hit television series “Game of Thrones”. “Great houses, great families, battle each other fiercely to seize control over the Iron Throne,” he said.
But “confrontation and collision impose a tragic price not only on those who are defeated but also on the winners”. And IMF chief Christine Lagarde warned of a “degree of uncertainty that we have not seen before” in international trade.
Disaster can still be averted, officials said at the Bali meet, with reassuring talk from the global financial elite that growth remains strong — the IMF projects 3.7 percent for this year and the next — and could yet withstand the risks gathering on the horizon.
And despite tensions, US and Chinese officials in Bali also sounded conciliatory tones. US Treasury Secretary Steve Mnuchin described “productive” talks with the Chinese on the yuan, which Washington has accused Beijing of keeping artificially low to boost exports.