Washington, DC — The leaders of the International Monetary Fund and the World Bank appealed to their 189 member countries on Friday to resolve widening disagreements on trade and other issues, warning that the divisions threaten to worsen the impact of a global slowdown.
The IMF’s managing director, Kristalina Georgieva, cited the fallout from a variety of factors: the U.S.-China trade war, which has engulfed the world’s two biggest economies; spreading weakness in Europe that is linked to Brexit; and rising tensions in the Middle East.
“Trade tensions are now taking a toll on business confidence and investment,” she said in her opening address to the finance officials.
The World Bank’s president, David Malpass, said the slowdown in global growth was hurting efforts to help the 700 million people around the world living in extreme poverty, especially in nations trying to cope with a flood of refugees from regional conflicts.
“Many countries are facing fragility, conflict and violence, making development even more urgent and difficult,” he said.
Finance ministers and central bank officials from the Group of 20 major industrial countries also noted the slowdown but projected a pickup in growth next year, as long as the risks do not intensify.
Japan’s finance minister, Taro Aso, told reporters after the G-20 discussions that the finance officials “broadly agreed that the global economic expansion continues but that its pace remains weak.” Risks remain from “trade and geopolitical tensions,” said Aso, whose country served as the G-20 chair this year.
Georgieva, a Bulgarian economist who had been the No. 2 official at the World Bank, recognized the accomplishments of her IMF predecessor, Christine Lagarde, the first woman to head that agency. Lagarde was in the audience for the speech.
“As someone who grew up behind the Iron Curtain, I could never have expected to lead the IMF,” Georgieva said. She noted she had witnessed the devastation of bad economic policies when her mother lost 98% of her life savings during a period of hyperinflation in the 1990s in Bulgaria.
She said the world was in the midst of a slowdown with nearly 90% of the global economy experiencing weaker growth this year. The IMF this week projected that growth would only reach 3% this year, the weakest performance in a decade.
The IMF and World Bank meetings were expected to be dominated by the trade disputes triggered by the Trump administration’s get-tough policies aimed at lowering America’s huge trade deficits and boosting U.S. manufacturing jobs. So far those efforts have made little headway.
In addition to the battle between the United States and China, higher U.S. tariffs went into effect Friday on $7.5 billion in European goods coming into the United States in a dispute involving airplane subsidies.
France’s finance minister, Bruno Le Maire, said China probably would be the real winner in the U.S.-EU trade fight. He said the EU was ready to negotiate a settlement to avoid the tariffs but so far the U.S. has rejected those efforts.
“From the very beginning, we have made it very clear that we want to avoid a trade war,” Le Maire said. “The response from the U.S. administration has always been a closed door.”
Georgieva said Thursday a tentative U.S.-China trade agreement announced last week should lessen the damage slightly, but solid global growth would not return until the two countries resolved their differences.
She said she hoped this week’s talks would focus on ways to ease trade tensions and begin the groundwork to update the rules of world trade. The Trump administration has repeatedly attacked the Geneva-based World Trade Organization, saying it is biased against the United States.