According to the International Monetary Fund the general populist attitude against trade and immigration is the result of the poor global economy management
Following Britain living the European Union, the International Monetary Fund warns about global economic stagnation and its risky effects over the world’s near future.
“Without a determined policy action to support economic activity over the short and longer terms subpar growth at recent levels risks feeding on itself through the negative economic and political forces it is unleashing. I think it would have been malpractice not to think about those possibilities and clearly central banks did think about those possibilities. They did prepare for them. Markets knew they were preparing for them and I would credit that preparation in part for the mild response that we ended up, ended up seeing,” IMF chief economist Dr. Maurice Obstfeld commented.
Moreover, the possibility of Donald Trump being elected as the President of the U.S.A. is even more concerning, as he may adopt a policy that will destabilize confidence in U.S. banks, unwind trade agreements and set heavy China and Mexico import taxes.
“There has clearly been a lot of discussion on the election given changes which could be quite dramatic, especially in terms of what had been long standing positions on trade policy. I think these introduce an element of policy uncertainty into the mix and you know as we know uncertainty is not great for investors and for employment. So we’ll see how this develops going forward. It’s very hard to know what would actually happen, you know after the election, given the various checks and balances within the US Government,” Dr. Obstfeld added.
Nevertheless, despite grim forecast, economy experts are even more pessimistic about the IMF’s outlook. “The IMF has consistently been over-optimistic during recent years due to institutional pressures within the IMF to agree with its members’ own forecasts,” chief economist Michael Pearce concluded. The IMF is concerned that the global economy is “moving sideways”, as its growth forecasts remain unchanged at a rate of 3.4 for the year to come.
