IMF Raises Concerns of Anti-Trade Rhetoric in US Election
Anti-trade and anti-globalization talk has been on the rise around the world.
NEW YORK -- The International Monetary Fund (IMF) has warned that anti-trade rhetoric in the U.S. and across the globe threatens economic growth and efforts to combat income inequality in a new report released today.
The IMF also revised its 2016 growth forecast in the U.S. to 1.6 percent from 2.2 percent. Global growth projections were lowered to 3.1 percent from the 3.2 percent estimate in April.
In addition to highlighting economic headwinds for the global economy, the IMF said in its biannual World Economic Outlook that several non-economic factors could threaten growth -- chief among them, the Brexit vote and sentiment against global trade.
The United Kingdom’s decision on June 23 to leave the European Union reflects “a resentment of cross-border migration that has fueled nationalist sentiment," the IMF said in the report.
"Similar tensions afflict the U.S. political scene, where anti-immigrant and anti-trade rhetoric have been prominent from the start of the current presidential election round. Across the world, protectionist trade measures have been on the rise."
In recent months, liberal and conservative candidates across the U.S. and Europe have stoked populist sentiment by criticizing established trade and globalization policies championed by organizations like the IMF.
In the U.S., Republican presidential nominee Donald Trump as well as former Democratic candidate Bernie Sanders have denounced free trade on the campaign trail.
Trump once described the Trans-Pacific Partnership (TPP) as “another disaster, done and pushed by special interests who want to rape our country. Just a continuing rape of our country. That’s what it is too.”
IMF officials appear to be raising alarm over the rhetoric.
“Policymakers must address the backlash against global trade by refocusing the discussion on the long term benefits of economic integration,” the report said.
The IMF argued that hostility toward trade would make it harder for developing countries to build their economies and lift their citizens out of poverty.
"It is vitally important to defend the prospects for increasing trade integration,” the report said. “Turning back the clock on trade can only deepen and prolong the world economy’s current doldrums."
The report warned that unless economic prospects improved, anti-globalization sentiment would continue to threaten efforts for countries to cooperate on non-economic issues.
"The need for international cooperation extends to a much broader set of international public-good problems—refugees, climate, infectious disease, security, corporate taxation, and financial stability, for example,” wrote Maurice Obstfeld, IMF economic counselor.
While the report noted that increased trade and economic integration is beneficial, policymakers must ensure “that well-targeted social initiatives help those who are adversely affected and facilitate, through retraining, their absorption into expanding sectors,” the report said.
In other words, the report is calling for governments to provide training programs for people whose jobs have disappeared, which would allow them to find new jobs in industries that are growing.
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