(Bloomberg) -- Mounting trade tensions and stresses in emerging markets are starting to take a toll on the world economy. The International Monetary Fund this week said world growth is plateauing and cut its outlook for the first time since 2016. Those issues are dominating talks at the annual IMF and World Bank meetings in Bali, Indonesia this week, as well as a stock-market rout that’s spread from the U.S. to Asia.
Here are the latest developments from the meetings, updated throughout the day. (Time-stamps are local time in Bali.)
IMF’s Lagarde to Attend Saudi Investment Summit (1:37 p.m.)
IMF Managing Director Christine Lagarde said she still plans to attend the “Davos in the Desert” summit in Saudi Arabia, an event that has become shrouded in controversy after Turkish officials alleged Jamal Khashoggi, a Washington Post columnist who lived in self-imposed exile, was murdered in the kingdom’s consulate in Istanbul.
The three-day gathering, officially known as the Future Investment Initiative, is intended to showcase Prince Mohammed bin Salman’s modernization plan for the country.
“At this point, my intention is to not change my plan and to be very attentive to the information that is coming up in the next few days,” Lagarde told reporters in Bali. "Human rights, freedom of information are essential rights,” she said, adding that she intends to remain an outspoken voice on important issues.
Risks To Global Economy Growing, IMF Panel Warns (1:25 p.m.)
The global recovery is increasingly uneven and risks are being skewed to the downside, the IMF’s main policy-advisory panel warned Saturday.
While the world expansion remains strong, the outlook is being clouded by “heightened trade tensions and ongoing geopolitical concerns, with tighter financial conditions particularly affecting many emerging market and developing countries,” said the International Monetary and Financial Committee, a 24-member panel that advises the fund on policy issues.
The committee made the following recommendations:
- Member nations agreed to refrain from “competitive devaluations and will not target our exchange rates for competitive purposes”
- Countries should rebuild fiscal “buffers” where possible and avoid "procyclical” stimulus
- Central banks should “maintain monetary accommodation where inflation is below target, and withdraw it in a gradual, well-communicated, and data dependent manner where inflation is close to or above target”
- They also acknowledged that “free, fair, and mutually beneficial goods and services trade and investment are key engines for growth and job creation”
Mnuchin Says Public Debt Transparency Is Key (12:54pm)
U.S. Treasury Secretary Steven Mnuchin called for more transparency on public debt data, saying high and rising debt levels in emerging and low-income countries continue to be a key risk to the global economy.
“Improving the transparency and comprehensiveness of debt data as it relates to publicly guaranteed and contingent liabilities is critical for more effective debt sustainability assessments and policy responses to debt-related risks,” Mnuchin said in a statement on Saturday to the Development Committee of the World Bank and International Monetary Fund.
He added that global growth isn’t as widespread as it was six months ago, and countries must “act decisively to strengthen economic policy frameworks and pursue sound monetary policies to address macroeconomic and financial vulnerabilities.”
China Says Trade War Is Not Solution (11am)
Appropriate domestic policy, not a trade war, is the solution to make sure people can equally benefit from globalization, China’s deputy finance minister said.
"We’re against the trade war. We always believe that trade war is a problem, not a solution to the impacts and challenges of globalization," Zou Jiayi said on a panel.
People who feel frustrated that the benefits of global development isn’t evenly shared should resort to proper domestic policies and international cooperation to address the problem, Zou said. The Chinese government has started a three-year poverty alleviation plan to ensure more of its people will benefit from the nation’s development, she said, suggesting other countries do the same to improve equity.
"It is the sovereign government’s responsibility to ensure the outcome of the development of this particular country would be properly shared by the most majority of the people," she said.
Ex-Goldman FX Strategist Says Trade War the Focus (10:24am)
While the sell-off in global markets dominated headlines this week, delegates attending the Institute of International Finance’s annual meetings in Bali have only one issue on their minds, according to Robin Brooks, the group’s chief economist.
“There’s really only one discussion that’s happening here, in earnest,” Brooks said in an interview. “And that is basically the intensity of the trade dispute between the U.S. and China and how bad that will get -- how prolonged and how pernicious.”
Much of the discussion centers on how the U.S. and China can reach a middle ground, if at all.
“The underlying question people have is what is the Trump administration’s goal,” Brooks said, and a former head of currency strategy at Goldman Sachs Group Inc. “That’s the big debate -- how far will it go.”
Warjiyo Discusses Rising Rates With Fed’s Powell (8:30am)
Bank Indonesia Governor Perry Warjiyo discussed rising global interest rates in a meeting with U.S. Federal Reserve Chairman Jerome Powell on the sidelines of the Bali meetings on Friday.
The two spoke about economic developments and policy normalization in developed nations and the effect on emerging markets, Bank Indonesia said in a statement. Warjiyo also told Powell about Indonesia’s economic resilience, supported by the policy mix carried out by the central bank and the government, it said.
Indonesia has been among the hardest hit in Asia amid a global emerging-market rout as the Fed has hiked interest rates, with the rupiah down almost 11 percent against dollar this year.
- 1:30pm: Ethiopian Finance Minister Abraham Tekeste holds a "Governor’s Talk”
- 2:30pm: Press briefing by African finance ministers
- 2:30pm: Bank of Japan Governor Haruhiko Kuroda gives a "Governor’s Talk”
- 4pm: Is There a New Orthodoxy for Monetary Policy panel
- 4:15pm: Brazil central bank Governor Ilan Goldfajn in "Governor’s Talk”
--With assistance from Tassia Sipahutar and Yinan Zhao.
To contact the reporters on this story: Enda Curran in Hong Kong at firstname.lastname@example.org;Andrew Mayeda in Washington at email@example.com;Saleha Mohsin in Washington at firstname.lastname@example.org
To contact the editors responsible for this story: Brendan Murray at email@example.com, Sarah McGregor, Nasreen Seria
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