WASHINGTON â€” Global finance leaders are downplaying differences over free trade with President Donald Trump, saying there is wide agreement that globalization delivers stronger economic growth.
But officials gathered for the spring meetings of the World Bank and International Monetary Fund warn repeatedly that too many people have been left behind at a time when low-wage competition and automation have reduced factory jobs in the world’s wealthy economies.
If more isn’t done, “we will see more protectionism and countries retreating from globalization,” German Finance Minister Wolfgang Schaeuble told reporters after a meeting of the finance ministers and central bankers of the Group of 20, which represents the biggest global economies. Germany is chairing the group this year.
The comments came a day after Trump ordered the U.S. Commerce Department to investigate whether steel imports posed a threat to U.S. national security â€” a move that could lead to the U.S. imposing tariffs on steel.
And on Friday U.S. Treasury Secretary Steven Mnuchin repeated a call for the IMF to police the currency markets and call out countries that undervalue their currencies to gain an unfair price advantage for their exporters.
At a meeting last month in Baden-Baden, Germany, the G-20 dropped a pledge to oppose trade protectionism amid pushback from the Trump administration, which says trade policy needs to more clearly benefit American companies and workers.
But in Washington this week, IMF chief Christine Lagarde and World Bank President Jim Yong Kim talked up the benefits of unfettered global trade. Lagarde on Thursday described protectionist measures as “self-inflicted wounds” that hobble economic growth.
At his news conference Friday, Schaeuble dodged questions about whether other countries expressed concerns about Trump’s America First trade rhetoric during the G-20 meetings, which got underway with a dinner Thursday night.
The G-20 finance officials generally agreed with the assessment made by the IMF on Tuesday in its latest economic outlook â€” that global growth should pick up this year, helped by improving conditions in the United States and China, the world’s two biggest economies.
But there are risks to the sunny outlook. Schaeuble warned that economic policymakers needed “to prepare ourselves” for the end of easy money policy from the world’s central banks. “This will be challenging,” he said.
In the U.S., the Federal Reserve has raised short-term interest rates twice since December, is on target for more hikes this year and is weighing whether to begin selling part of its vast portfolio of bonds, a move that also could drive up rates.
Federal Reserve Vice Chairman Stanley Fischer said in a CNBC interview on the sidelines of the meetings that he had not seen anything yet to change the view that the Fed will raise rates two more times this year, but he said the actual rate hikes “are dependent on what happens to the economy.”
On when the Fed might begin reducing its massive $4.5 trillion balance sheet, Fischer noted that the minutes of the last meeting showed that central bank officials discussed making a decision on when to begin trimming assets by the end of the year. But he said no decision had been made yet on whether the reductions in bond holdings would start by December or just be announced.
Rising interest rates in the United States could drive up the dollar, hurt American exporters and squeeze foreign borrowers who took out loans they have to repay in the U.S. currency.
At a time of rising tensions over Syria and North Korea’s nuclear weapons program, Schaeuble also said “the geopolitical risk is by far the (biggest) risk for stable economic development.”
Paul Wiseman And Martin Crutsinger, The Associated Press