IMF Issues New Warning on Global Economy as Chinese Exports Plunge
By Nick Beams
Global Research
March 10, 2016
The International Monetary Fund warned this week of a further weakening of the global economy following the release of figures showing a significant decline in Chinese and global trade.
In a major speech to the National Association for Business Economics in Washington on Tuesday, the first deputy managing director of the IMF, David Lipton, said that it was “most disconcerting” that the rise in “risk aversion” was leading to a “sharp retrenchment in global capital and trade flows.”
He noted that emerging markets experienced a capital outflow of $200 billion last year compared to a net inflow of $125 billion in 2014. “Trade flows meanwhile are being dragged down by weak export and import growth in large emerging markets such as China, as well as Russia and Brazil, which have been under considerable stress,” he said.
Lipton made his remarks following the release of data showing that Chinese exports experienced their biggest contraction since 2009. It was another sign that, far from the world economy being on the road to “recovery,” global demand is continuing to fall.
Chinese exports in February were down by 25.4 percent in dollar terms from a year earlier, after falling by 11.2 percent in January, while imports declined by 13.8 percent, after dropping by 18.8 percent in January. While the figures may have been somewhat distorted because of issues related to the lunar New Year holiday, the combined January and February falls add up to a marked decline over the previous year, and no one is expecting the March data to show any improvement.
The Chinese results are the latest in a series of reports showing a decline in world trade, especially over the past two years, as a result of intensifying recessionary trends. In the years before the financial meltdown, world trade grew at about twice the rate of growth for the world economy. Since 2011, it has been in line with or even below that figure.
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