Logo of Phnom Penh Post newspaper Phnom Penh Post - ‘Narrowing’ window of opportunity

‘Narrowing’ window of opportunity

Content image - Phnom Penh Post
US Treasury Secretary Steven Mnuchin downplays global concerns expressed at an IMF meeting held this week in Bali under the shadow of US-China tensions. Goh Chai Hin/AFP

‘Narrowing’ window of opportunity

The window of opportunity for safeguarding global growth is “narrowing” as trade disputes deepen and emerging markets face fiscal crisis, the IMF said on Saturday, warning countries against worsening things by weaponising currency and interest-rate policies.

US Treasury Secretary Steven Mnuchin had downplayed the global concerns expressed at an International Monetary Fund meeting held last week in Bali under the shadow of US-China tensions, saying the world would benefit if Beijing is forced to change its trade policies.

But the IMF said in a communique that while global growth currently remained “steady”, the risks are “increasingly skewed to the downside amid heightened trade tensions and ongoing geopolitical concerns”.

The Fund kicked off its annual meeting with the World Bank on the Indonesian resort island earlier in the week in a gloomy mood, preoccupied by the trade tussle between the world’s two biggest economies, and tightening financial conditions faced by emerging markets.

On Tuesday, it cut its outlook for global GDP growth by 0.2 per cent to 3.7 per cent for this year and next, citing the trade war.

“The window of opportunity [is] narrowing,” the 189-country organisation said, adding that members would “refrain from competitive [currency] devaluations and will not target our exchange rates for competitive purposes” – a line apparently aimed at the US and China.

US President Donald Trump has accused Beijing of depreciating its currency to absorb the impact of US trade tariffs.

Currency manipulator

But Mnuchin, speaking on the Bali meeting’s sidelines, declined to comment on whether Washington would declare Beijing a “currency manipulator” in a Treasury report due out next week.

That would be a first for China, triggering a process that could lead to punitive steps.

Mnuchin also pushed back against the growing global angst over the US-China trade fight, saying that pressuring Beijing into adopting more open trade policies would be good for all.

“Our objective with China is very clear: it’s to have a more balanced trading relationship,” he said.

“I think if we are successful, this is very good for US companies, US workers, Europeans, Japan, all of our other allies, and good for China.”

The argument gained little traction in Bali on Saturday.

“Trade conflict would be bad for all economies, not just the US and China,” Japanese central bank governor Haruhiko Kuroda said.

“This type of thing will not be good for the US economy, the China economy, but also for the economies of Asia and the world.”

Tensions have soared recently with Trump’s administration rolling out billions of dollars in tariffs against China in a bid to tackle its trade deficit and rein in what Washington considers unacceptable Chinese trade practices.

Mnuchin said Washington’s ultimate goal was a “free, fair and reciprocal relationship” with Beijing.

Attention has begun to turn toward hopes that Trump and Chinese President Xi Jinping could meet on the sidelines of the G-20 summit next month in Argentina and bury the hatchet with some sort of agreement.

“To the extent that we can make progress toward a meeting, I would encourage that and that’s something we are having discussions about,” said Mnuchin.

World markets also have been roiled by a plunge in some emerging market currencies – including Turkey and Argentina – as domestic financial crises and higher US interest rates lure returns-hungry investors to the dollar.

The IMF statement said it would push to improve the World Trade Organisation and boost confidence in the global trading system.

It added that it would continue to help countries deal with the social and economic costs of “pandemics, cyber risks, climate change and natural disasters, energy scarcity, conflicts, migration, and refugee and other humanitarian crises”.

MOST VIEWED

  • Phnom Penh placed in two-week lockdown

    The government has decided to place Phnom Penh in lockdown for two weeks, effective April 14 midnight through April 28, as Cambodia continues to grapple with the ongoing community outbreak of Covid-19, which has seen no sign of subsiding. According to a directive signed by Prime Minister

  • Cambodia on the verge of national tragedy, WHO warns

    The World Health Organisation (WHO) in Cambodia warned that the country had reached another critical point amid a sudden, huge surge in community transmission cases and deaths. “We stand on the brink of a national tragedy because of Covid-19. Despite our best efforts, we are

  • Hun Sen: Stay where you are, or else

    Prime Minister Hun Sen warned that the two-week lockdown of Phnom Penh and adjacent Kandal provincial town Takmao could be extended if people are not cooperative by staying home. “Now let me make this clear: stay in your home, village, and district and remain where

  • Vaccination open to foreigners in Cambodia

    The Ministry of Health on April 8 issued an announcement on Covid-19 vaccination for foreigners residing and working in Cambodia, directing the Ministry of Labour and Vocational Training and local authorities to register them. Health minister Mam Bun Heng, who is also head of the inter-ministerial

  • Ministry names types of business permitted amid lockdown

    The Ministry of Labour and Vocational Training singled out 11 types of business that are permitted to operate during the lockdown of Phnom Penh and Takmao town, which run through April 28. Those include (1) food-processing enterprises and slaughterhouses; (2) providers of public services such as firefighting, utility and

  • Culture ministry: Take Tuol Sleng photos down, or else

    The Ministry of Culture and Fine Arts has told Irish photographer Matt Loughrey to take down the photos of Khmer Rouge victims at Tuol Sleng Genocidal Museum which he allegedly colourised and altered to show them smiling. The ministry said Loughrey's work is unacceptable, affecting