CEBU, Philippines: The International Monetary Fund ( IMF) warned on Tuesday ( Nov 19 ) that “tit-for-tat” tariffs could undermine Asia’s economic prospects, raise costs and disrupt supply chains even as it expects the region to remain a key engine of growth for the global economy.
At a conference on widespread danger in Cebu, IMF Asia-Pacific Director Krishna Srinivasan stated that” the tit-for-tat punitive taxes threaten to disrupt the region’s growth prospects, leading to longer and less effective supply bars.”
Srinivasan’s notes come amid worries over US President-elect Donald Trump’s program to establish a 60 per cent tax on Chinese products and at least a 10 per cent tax on all other exports.
Taxes could stifle global trade, stifle exporting countries ‘ growth, and possible cause inflation in the US, causing the US Federal Reserve to impose a tighter monetary policy despite the country’s bleak future of growth.
In October, the European Union even decided to raise taxes on Chinese-built electric cars to as much as 45.3 per share, prompting retaliation from Beijing.
The most recent World Economic Outlook from the IMF projects a 3.2 % global economic growth rate for 2024 and 2025, which is lower than the 4.6 % projections for Asia, which are 4.4 % for this year and 4.4 % for the following year.
Asia is “witnessing a time of significant transition”, creating greater confusion, including the “acute chance” of escalating trade tensions across big investing partners, Srinivasan said.
He added that uncertainty surrounding financial policy in developed economies and market expectations could have an impact on Asian financial decisions, which would affect global exchange rates, capital flows, and additional financial markets.