US president-elect Donald Trump’s tariff threats are already driving up longer-term borrowing costs around the world, IMF Managing Director Kristalina Georgieva said.
Uncertainty about the incoming administration’s trade policies is adding to worldwide economic headwinds and “is actually expressed globally through higher long-term interest rates,” Georgieva told reporters in Washington on Friday last week.
That is happening even as short-term rates have gone down, a “very unusual” combination, she said.
Photo: AFP
Trump, who is to take office on Jan. 20, has vowed to slap new charges on imports from US adversaries such as China, as well as allies including Canada and Mexico, raising concerns that supply-chain disruption would slow economic growth and push prices higher.
IMF chief economist Pierre-Olivier Gourinchas warned in October last year that tariffs and trade uncertainty could reduce global output by about 0.5 percent.
The closing weeks of last year and first days of the new year have seen sharp increases in bond yields across much of the world and a surge in the US dollar, as investors weigh the likely impact of Trump’s second-term policies.
“Not surprisingly, given the size and role of the US economy, there is keen interest globally in the policy directions of the incoming administration, in particular on tariffs, taxes, deregulation and government efficiency,” Georgieva said.
The impact from US trade policies would be most acute on countries and regions integrated with global supply chains, including many medium-sized economies and Asia as a region, she added.
The greenback’s strength “could fuel higher funding costs for emerging economies and especially for low-income countries,” she said.
US economic numbers, including Friday last week’s blockbuster jobs report, show that the US Federal Reserve “can afford to wait for more data before making further cuts” to its benchmark interest rate, she said.
The IMF has been warning since the COVID-19 pandemic of mediocre growth prospects for the global economy. In October last year, it predicted a 3.2 percent expansion this year, a forecast that is due to be revised on Friday when the fund publishes an update of its World Economic Outlook.
Georgieva hinted that the overall number would not change much, saying that the IMF sees “global growth holding steady,” but she pointed to significant divergences.
“The US is doing quite a bit better than we expected before,” she said.
By contrast, the EU is “somewhat stalling,” India “a little weaker,” and China is facing challenges from deflationary pressure and low domestic demand.
KEEPING UP: The acquisition of a cleanroom in Taiwan would enable Micron to increase production in a market where demand continues to outpace supply, a Micron official said Micron Technology Inc has signed a letter of intent to buy a fabrication site in Taiwan from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion to expand its production of memory chips. Micron would take control of the P5 site in Miaoli County’s Tongluo Township (銅鑼) and plans to ramp up DRAM production in phases after the transaction closes in the second quarter, the company said in a statement on Saturday. The acquisition includes an existing 12 inch fab cleanroom of 27,871m2 and would further position Micron to address growing global demand for memory solutions, the company said. Micron expects the transaction to
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
US actor Matthew McConaughey has filed recordings of his image and voice with US patent authorities to protect them from unauthorized usage by artificial intelligence (AI) platforms, a representative said earlier this week. Several video clips and audio recordings were registered by the commercial arm of the Just Keep Livin’ Foundation, a non-profit created by the Oscar-winning actor and his wife, Camila, according to the US Patent and Trademark Office database. Many artists are increasingly concerned about the uncontrolled use of their image via generative AI since the rollout of ChatGPT and other AI-powered tools. Several US states have adopted
A proposed billionaires’ tax in California has ignited a political uproar in Silicon Valley, with tech titans threatening to leave the state while California Governor Gavin Newsom of the Democratic Party maneuvers to defeat a levy that he fears would lead to an exodus of wealth. A technology mecca, California has more billionaires than any other US state — a few hundred, by some estimates. About half its personal income tax revenue, a financial backbone in the nearly US$350 billion budget, comes from the top 1 percent of earners. A large healthcare union is attempting to place a proposal before
RSS