Thursday, 21 November, 2024
The International Monetary Fund (IMF) cautioned on Tuesday that escalating "tit-for-tat" tariffs could jeopardize Asia's economic outlook, increase costs, and disrupt critical supply chains, despite the region's role as a key driver of global growth.
"Retaliatory tariffs threaten to derail growth prospects across Asia, resulting in longer and less efficient supply chains," said Krishna Srinivasan, IMF Asia-Pacific Director, speaking at a forum on systemic risk in Cebu.
Srinivasan’s warning comes amid growing concerns about US President-elect Donald Trump's proposed trade policies, including a 60% tariff on Chinese goods and a minimum 10% levy on all other imports.
The IMF has emphasized the potential ripple effects such policies could have on global trade, with Asia being particularly vulnerable due to its deep integration into international supply chains.
Tariffs could impede global trade, hamper growth in exporting nations, and potentially raise inflation in the United States, forcing the US Federal Reserve to tighten monetary policy, despite a lacklustre outlook for global growth.
In October, the European Union also decided to increase tariffs on Chinese-built electric vehicles to as much as 45.3%, prompting retaliation from Beijing.
The IMF's latest World Economic Outlook forecasts global economic growth at 3.2% for both 2024 and 2025, weaker than its more optimistic projections for Asia, which stand at 4.6% for this year and 4.4% for next year.
Asia is "witnessing a period of important transition", creating greater uncertainty, including the "acute risk" of escalating trade tensions across major trading partners, Srinivasan said.
He added that uncertainty surrounding monetary policy in advanced economies and related market expectations could affect monetary decisions in Asia, influencing global capital flows, exchange rates, and other financial markets.
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The International Monetary Fund (IMF) cautioned on Tuesday that escalating "tit-for-tat" tariffs could jeopardize Asia's economic outlook, increase costs, and disrupt critical supply chains, despite the region's role as a key driver of global growth.
"Retaliatory tariffs threaten to derail growth prospects across Asia, resulting in longer and less efficient supply chains," said Krishna Srinivasan, IMF Asia-Pacific Director, speaking at a forum on systemic risk in Cebu.
Srinivasan’s warning comes amid growing concerns about US President-elect Donald Trump's proposed trade policies, including a 60% tariff on Chinese goods and a minimum 10% levy on all other imports.
The IMF has emphasized the potential ripple effects such policies could have on global trade, with Asia being particularly vulnerable due to its deep integration into international supply chains.
Tariffs could impede global trade, hamper growth in exporting nations, and potentially raise inflation in the United States, forcing the US Federal Reserve to tighten monetary policy, despite a lacklustre outlook for global growth.
In October, the European Union also decided to increase tariffs on Chinese-built electric vehicles to as much as 45.3%, prompting retaliation from Beijing.
The IMF's latest World Economic Outlook forecasts global economic growth at 3.2% for both 2024 and 2025, weaker than its more optimistic projections for Asia, which stand at 4.6% for this year and 4.4% for next year.
Asia is "witnessing a period of important transition", creating greater uncertainty, including the "acute risk" of escalating trade tensions across major trading partners, Srinivasan said.
He added that uncertainty surrounding monetary policy in advanced economies and related market expectations could affect monetary decisions in Asia, influencing global capital flows, exchange rates, and other financial markets.
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