The International Monetary Fund has issued a warning to political leaders: Don’t raise trade barriers.
The IMF upgraded its forecast for the global economic growth by 0.1 percentage points on Tuesday to 3.5%. But it said that “inward-looking policies” could derail economic improvements.
“Avoiding the damage from potential protectionist measures will require a renewed multilateral commitment to support trade,” said IMF head of research Maurice Obstfeld.
The warning appears to be aimed at President Trump’s “America First” agenda and other protectionist polices.
Trump has already pulled the U.S. out of one vast trade deal in the Pacific. He’s also promised to renegotiate the NAFTA agreement with Canada and Mexico, and threatened to slap tariffs or taxes on imports.
The IMF cautioned that its forecasts are “particularly uncertain” because of potential policy changes by the new U.S. administration.
The IMF said stronger growth is being fueled by a “long-awaited” recovery in investment, manufacturing and trade. The group expects the global economy to grow by 3.6% in 2018.
U.S. growth is expected to hit 2.3% in 2017, up from 1.6% in 2016. Forecasts for Japan (1.25%) and the U.K. (2%) have also been upgraded.
The IMF expects India to be the fastest growing major economy in 2017, expanding by 7.2%, despite its rocky demonetization program.
China is set to grow 6.6% this year and 6.2% in 2018, compared to 6.7% in 2016. The IMF warned China over its growing debt problem, which is especially acute in its corporate sector.
