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IMF Sees Global GDP Growth Despite Protectionist Trends

Apr 21, 2017  | Ep4235

Donald Trump travelled to the Dairy State this week as relations soured between many upper Midwest farmers and our neighbors to the north. The president renewed a call to “buy American” even as the global economy is trending up. Peter Tubbs has the details.

The outlook for global economic growth has improved in recent months. But local trade skirmishes threaten to put a drag on trade growth in North America.

The International Monetary fund released its growth projections for 2017 this week, projecting global GDP growth of 3.5%, an improvement over 2016.

Maurice Obstfeld, IMF Economic Counselor “Acceleration will be broad-based across advanced, emerging and low income economies, building on gains we have seen in both manufacturing and trade."

The IMF credits stabilization in commodity prices and increases in trade and technology with the optimistic forecast, as the global economy continues to accelerate away from the global recession earlier in the decade.

Maurice Obstfeld, IMF Economic Counselor  “Whether the current momentum will be sustained remains a question mark. There are clearly upside possibilities. Consumer and business confidence in advanced economies could rise further, though confidence indicators are already at elevated levels, relatively speaking.”

Yet the economic rewards of the current expansion have been uneven. Flat personal incomes despite GDP expansion are causing individual nations to turn inward politically, which could result in protectionist trade policies and a reduction in global trade.

Maurice Obstfeld, IMF Economic Counselor “A broad withdrawal from multilateralism could lead to such self-inflicted wounds as widespread protectionism or a competitive race to the bottom of financial oversight. A struggle of each against all that will leave all countries worse off.”

One example of this struggle is the dispute between Canada and the United States over ultra-filtered milk. The protein liquid used in the production of cheese had been on a competitive price level with Canadian ultra-filtered milk, but changes in how Canada prices the dairy product puts Canadian dairy producers at a competitive advantage versus dairies south of their border.

The pricing changes has forced American exporters to stop shipments to Canada, causing 70 dairies in Minnesota, Wisconsin and New York and hundreds of farmers to lose a valuable sales channel.

In Wisconsin this week, Donald Trump renewed his campaign promise to “Put America First” and pledged to confront the Canadians over the pricing changes.

Donald Trump: “We are also going to stand up for our dairy farmers in Wisconsin. And I’ve been reading about it, and I’ve been talking about it for a long time, and that demands, really, immediately fair trade with all of our trading partners, and that includes Canada.”

Late this week the Canadian Prime Minister said he looked forward to having “fact-based discussion” on the dispute.

 

 

 

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