Lagarde: Trade has become political football — and our founding fathers would be concerned

Christine Lagarde, managing director of the International Monetary Fund (IMF), says if the founding fathers of the IMF were alive today, they would be concerned that trade has become political football.

Speaking on the challenges of free trade and current transitions in global economy, Lagarde said it would have been great to call great thinkers of the past to help with current challenges.

“Our discussions over the last few days have also been about the economic transition that looms ahead — driven by innovation and new technology, but by other factors too,” Lagarde said.

“Today, as we review our work and look ahead, I would like to talk about how we can manage that transition in a way that is inclusive — that benefits everyone. And I was wondering, wouldn’t it be marvelous if we could call on some of the Great Thinkers of the past to help us in this task?

“They would have plenty to tell us about economic transitions. So I am going to invite some of them into our conversation today. Who better to start with than John Maynard Keynes, one of the IMF’s founding fathers?

“He said that the challenge often ‘lies not so much in developing new ideas, as in escaping from old ones’. I will try to meet that challenge this morning — just as I have done during the five years since I first stood before you here.”

TRADE HAS BECOME POLITICAL FOOTBALL

“We project global growth at 3.1 percent this year, with only a modest acceleration to 3.4 percent next year. Putting it simply: growth has been too low, for too long, and benefiting too few,” Lagarde added.

“The social and political consequences are becoming all too apparent. Inequality remains too high in too many countries. Conflict and migration exert a terrible toll.

“Trade has become a political football. And supporters of economic integration – and cooperation – are on the defensive. If our founders were here today, they would surely be concerned.

“They shared a conviction that trade and openness are beneficial to those who embrace them. They agreed that multilateral dialogue is key to the stability of the global economy.”

IMF HAS GIVEN $415 BILLION IN LOANS TO MEMBER COUNTRIES

Lagarde said the IMF has “has embraced change at a phenomenal pace: From dealing with the financial crisis, to reform of our lending facilities, surveillance, and capacity building”.

“About 75 programmes for a total of US$415 billion; close to 670 Article IV consultations; and almost 17,000 technical assistance missions.

“Just a week ago, we were able to include the Chinese renminbi in the Special Drawing Rights basket — a significant step for China and the global economy. I would like to recognize the Chinese authorities for their efforts in fulfilling the SDR criteria.

“Just a few days ago, our membership decided to extend zero interest rates on all IMF concessional facilities – an important step to help low-income countries in their efforts to deal with future shocks and to achieve the Sustainable Development Goals”