Lagarde Calls Turn Away From Globalization World’s Top Challengeby
Poor countries hardest hit by protectionism, IMF chief says
Low growth, inequality stoking rise of populism, she says
The risk of countries turning their back on global cooperation is the biggest challenge facing the world, as low growth and rising inequality fuel the rise of populism, said IMF Managing Director Christine Lagarde.
“It did not take the Brexit vote to understand that low growth, rising inequality, and a lack of jobs have combined with social and geopolitical concerns to fuel the rise of populism and inward-looking forces,” Lagarde said in the text of a speech Thursday at the Center for Global Development in Washington. “The greatest challenge we face today is the risk of the world turning its back on global cooperation -- the cooperation which has served us all well.”
Britain’s vote to leave the European Union last month has roiled global markets, raising the prospect that opposition to trade and immigration could stoke anti-EU sentiment across Europe and bolster U.S. Republican presidential candidate Donald Trump.
Lagarde said a breakdown in cooperation would hit low-income countries particularly hard. Without a sharp increase in economic growth, one-third of the 60 low-income nations are unlikely to meet targets for reducing extreme poverty by 2030, she said.
Low-income countries face obstacles including climate change, violent conflict and the risk of failing to integrate a growing labor force. By 2035, the number of people reaching working age in sub-Saharan Africa will exceed that of the rest of the world combined, Lagarde said.
“If we are not able to provide this coming generation with a livelihood and a chance to share in global welfare, we should be prepared for migration and political strife at an unprecedented level,” she said. “And let us have no illusions that this would stop at the water’s edge, or at borders secured by a wall or chain-link fence.”
Trump has proposed building a wall at the U.S. border with Mexico to prevent illegal immigration, a project he says the Mexican government should pay for.
Many poor countries need to broaden their tax bases, improve infrastructure and make growth more inclusive, Lagarde said.