Global policy makers are adopting a “glass half full” approach to the world economy, focusing on its sustained expansion even when acknowledging risks have mounted.
That’s the overriding theme both of the International Monetary Fund’s semi-annual meetings now underway in Washington and of our weekly wrap of the main economic talking points.
While investors are expressing concerns that momentum may be subsiding amid talk of a trade war, Wall Street economists and the IMF are forecasting the global economy will still expand this year by almost 4 percent, which would be the best since 2011. China showed signs of stability too as consumers offset an industrial slowdown. That’s not to say there aren’t challenges. As well as trade tensions, the IMF sounded the alarm on mounting debt and potential instability in financial markets.
Trade War Talk
The biggest threat out there is still that of a trade war. President Donald Trump opened a new front on Monday in warning China against devaluing its currency even though it’s climbed lately. Beijing offered a carrot by promising greater market access for car makers and a stick in the form of duties on imports of U.S. sorghum. Both the U.S. and China are seeking allies in their confrontation over trade and investment.
- Trade War Risk Alive as EU Talks Tough on Trump’s Tariffs
- China Learning Lessons From Japan’s 1980s Trade Spat With U.S.
- Stiglitz Says True U.S.-China Trade Accord ‘Almost Impossible’
- Fed Economists Say Tariffs More Likely to Kill Than Create Jobs
The Bank of Canada left interest rates unchanged this week as Governor Stephen Poloz bets the expansion can continue without fueling inflation. While the euro area is slowing, European Central Bank President Mario Draghi may also be willing to let his economy overheat. People’s Bank of China Governor Yi Gang underscored his technocratic skills by delivering a one percentage point reduction in the reserve requirement for most banks.
- Emerging Central Banks Surprise Most on Policy, Fed the Least
- Limited and Gradual BOE Seen Hiking Rates Just Once in 2018
- RBNZ May Be Closer to Inflation Ideal, Depending Where You Look
- Trump’s Wish for Lower Oil Prices Wouldn’t Be Clear Boon to U.S.
- That Hissing Sound Is Optimism Deflating Under Trump’s Tariffs
- Elite Dating Apps Spark Romance and Fuel Wealth Inequality, Too
- China’s Too-Predictable GDP Fuels Suspicions of Fudged Numbers
- Russian Consumer Limped Along Before Sanctions Jolted Ruble
- Trump Makes Another Fine Choice for the Federal Reserve: Noah Smith
- From Citigroup to the Fed, Curve-Inversion Angst Is Intensifying
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