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Protectionism would hamper growth says IMF { April 26 2004 } Original Source Link: (May no longer be active)
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Monday, April 26, 2004
Business
Protectionism would hamper growth: IMF
The Financial Express
Washington, April 25 Amid the outcry in the US over outsourcing of jobs, IMF has said the worldwide slide back to protectionism would harm prospects for economic growth in all countries and could undermine what has already been achieved. Voicing its concern over recent anti-outsourcing protests, especially in countries like the US, IMF acting managing director Anne Krueger said “it would be a setback nobody wants to contemplate.”
“In completing the Doha Round, countries must not lower their sights in striving for an ambitious agreement. A weaker multilateral agenda risks further boosting regional and bilateral initiatives which, over time, can fragment the global trading system and reduce its transparency,” she said addressing the spring meeting of international monetary and financial committee here.
She said the continued huge US current account deficit — now matched by a fiscal deficit of similar size — and surplus elsewhere, notably in Asia, “remain a serious concern.”
Global interest rates are very low and will have to rise eventually, but the timing and speed of future moves remain subject to considerable uncertainty, she said, adding the medium-term fiscal positions across the globe remain very difficult.
“Finally, while the Doha Round of trade negotiations appear to be regaining some momentum, differences among the negotiating parties remain large, and there are risks of further delay, which may disappoint expectations of healthy and sustained medium-term growth in gobal trade.
The IMF has said that stronger global growth in most regions should prompt world governments to implement critical economic reforms, including macroeconomic and structural policy measures, to achieve a robust, balanced and sustainable growth. “Improved prospects in most regions point to stronger global growth going forward,” the IMF’s policy-setting body, the IMF committee said in a statement on Saturday.
“It encourages countries to take advantage of the current environment to strengthen the foundation s for sustainable growth,” the ifm panel said. the priority now is to implement the macroeconomic and structural policy measures that will help achieve a robust, balanced and sustainable recovery.
Structural reforms, it said, are essential to improve growth potential and priority shuld be given to medium-term fiscal consolidation; reforms of pension and health care systems; better function of labour and product markets; and reducing vulnerabilities in banking and corporate sectors. the committee called on all countries and regions to play their part in addressing global imbalances.
The committee urged “a move toward more exchange rate flexibility as appropriate” in “some emerging market countries.” The panel, after hearing a report by Dr Supachai Panitchpakdi, director general of the World Trade Organization, called for constructive and determined efforts by all countreis to achieve early progress in the Doha Round.
The committee warned that the millennium development goals are at risk. “On current trends, most goals will not be met by most countries”. The chairman of the committee, British chancellor of the exchequer, Gordon Brown told reporters that his proposal to double the amount of money that will be available to developing countries from $50 billion to $100 billion a year through a new facility ‘international finance facility’ is being considered jointly by the IMF and World Bank.
It was discussed, Mr Brown noted, at a conference in Paris attended by more than 60 countries a few weeks ago and it drew support from African and other developing countries. In his speech to the committee, he opposed agricultural subsidies of the rich countries which are hitting developing countries and called it a “scandal.”
— PTI
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