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Bangkok Post
an hour ago
- Business
- Bangkok Post
WTO at 30 after decades of challenges
When I sat down to write an article "WTO at 10" for a commemorative book for the occasion in 2005, little did I know of the huge challenges the WTO and the multilateral trading system would have to confront in the following two decades. During its first decade in existence, the WTO basked in a mood of cautious optimism as its membership continued to expand and the process of globalisation was in full swing, also helped by the launch of the Doha Development Agenda and the joining of China in December 2001. The impact of China's WTO accession on the Chinese economy itself and on the global trading system has been unprecedented, part of which I have elaborated in my co-authored book (2002) with Mark Clifford on China and the WTO: Changing China, Changing World Trade. During its first ten years, the WTO stood the test not only arising from the Asian financial crisis (1997-98), the massive protests at the third Ministerial Conference (MC) in Seattle in 1999, but also some sensitive and high-profile dispute settlement cases. The crisis-hit countries in Asia could find their way out of the predicament, not least because the rest of the world kept its markets open and absorbed their exports. Their current accounts became more balanced, and trade has proved itself to be a powerful remedy, more so than the counterproductive conditional IMF standby support. In the meantime, the WTO's dispute settlement system has functioned as a remarkably efficient and effective mechanism for resolving trade conflicts between WTO members. Emeritus Professor Giorgio Sacerdoti, an international law professor at Bocconi University in Milan and former member of the Appellate Body offered in a book on the contribution of the dispute settlement system this comment: "The past ten years show the vitality of the dispute settlement system as had been envisaged, as well as its central position within the WTO as an element capable of ensuring respect of agreed rules." Although the Cancun Ministerial Conference in 2003 could not advance the Doha Agenda, it significantly marked the emergence of developing countries as active participants in the negotiation process. They have become serious demandeurs, witnessing their joint group approaches, their consistent push on Special and Differential Treatment (SD&T) proposals, support for LDC accessions, and, most importantly, the technical assistance initiatives through the Aid for Trade programme, enabling developing countries to meet international standards and access global markets. The introduction of cotton as a specific commodity for negotiation at Cancun, with my consistent support, also helped to focus on an item of major export earnings for several LDCs in Africa. Like several other negotiation issues, cotton, SD&T, and Trade-Related Intellectual Property Agreement (Trips) and its public health flexibilities would gain more traction going into the second decade of the WTO. WTO discussions on cotton took up two tracks: one on trade aspects and another on development assistance to raise productivity and enhance its value chain. Agreement was reached at the 2015 Ministerial Conference to prohibit the use of export subsidies and call for a further reduction in domestic support for cotton products. Since the launch of the SD&T negotiations in 2001, the issue continues to be discussed at several ministerial meetings, with only a ministerial declaration to be adopted at the 13th Ministerial Conference in 2024 as the first outcome ever made on agreement-specific proposals applicable to all developing countries. On Trips and public health, progress was made before the Cancun Ministerial to create flexibilities in using compulsory licensing beyond serving only domestic markets, but also allowing export of medicines to countries in need. This Trips amendment carries a humane face to WTO agreements in that countries with no manufacturing capacities in the pharmaceutical sector can now do parallel importing of the necessary medicines to deal with domestic health problems. This extension was given full legal effect in 2017 and further clarified at the WTO's 12th Ministerial Conference in 2022 in order to support equitable access to Covid-19 vaccines. Although the Doha Agenda could not be brought to an end in the WTO's second decade, another significant milestone was achieved in the form of the Trade Facilitation Agreement (TFA), coming into force in 2017. This agreement facilitates the harmonisation of export and import processes, resulting in the speeding up of the movement, release, and clearance of goods, including those in transit. According to the WTO World Trade Report 2024, the implementation of the TFA has led to a substantial increase in trade, with agricultural trade among developing economies increasing by 16 to 22%. The book The WTO at Twenty: Challenges and Achievements, published in 2015, concludes that the WTO has achieved much over its first 20 years, but the success of the WTO has inevitably given rise to new challenges. Indeed, the challenges came through thick and fast in the WTO's third decade. Multilateralism has come under threat as geopolitical polarisation began to take hold while the Doha negotiations dragged on with no end in sight. As trade tension grew between the US and China, the global trading system stuttered with rising uncertainty exacerbated by a growing number of trade restriction measures. Environmental concerns also contributed to border regulations that put more restraints on normal trade flows, such as carbon taxes and border carbon adjustment measures. The Appellate Body that has been an effective mainstay of the WTO's dispute settlement system (DSS) has been disabled since December 2019 due to the US blocking the appointment of new judges. With no appeal quorum, the enforceability of WTO rules is rendered impossible. Some alternatives to the existing system have been raised, such as the Multi-Party Interim Appeal Arbitration Arrangement (MP/A) with limited applicability. The US blocking has come with its concerns about the Appellate Body's interpretation of WTO rules, which has led to proposed reforms of the system, claiming the body's overstepping of its mandate. This US blocking is somewhat ironic, considering that the US has been the most prolific user of the DSB and gained positive rulings on a majority of complaints. When I was at the WTO, I made attempts to resort to arbitration as a means of dispute resolution. Now again we see this proposal being brought forward, recognising the possibility of applying "expeditious arbitration" under Article 25 of the DSU. As the WTO moves into its fourth decade, it needs to prepare itself to counter an extremely disruptive period in the world trading system. US President Donald Trump's 'liberation day' tariff hikes and subsequent retaliations or submissions are unprecedented and unpredictable. While the US will remain one of the world's most significant markets, its share in the world trade volume may gradually decline, while the share of South–South trade will continue to expand. But this chaotic situation should not really benefit anyone, and whether it will help to narrow the US trade deficit remains to be seen. The essential role of the WTO as the guardian of the rules-based trading system will be more needed than ever before. In the words of the late Cuban president Fidel Castro, as spoken to me when I was at the WTO: "The world needs the WTO to bring order to this chaotic world." In order to face up to this existential threat, the WTO must be able to seriously reform itself before it's too late. I fully concur with WTO Director-General Ngozi Okonjo-Iweala in her strongly prodding the members to agree on 'deep and thorough' reform proposals for the 14th Ministerial Conference in Yaoundé, Cameroon, next year, to ensure the WTO's relevance. First and foremost are the reforms of the DSU to entice the US back into the system, which needs to be simplified and easily accessible. This could lead to subsequent WTO-backed orderly discussions and negotiations to bring back the wayward tariffs into an acceptable configuration. In the meantime, the WTO may intervene to bring relief to the low-income developing countries injured by the tariff hikes. The chair of the General Council has been conducting informal consultations with the membership to ensure the impact of tariff escalations and to thrash out some joint actions to deal with the crisis. The process can help pave the way for focusing on the key reforms at the MC 14. In view of all these ongoing efforts, I do have full respect and confidence in the management of the WTO with the pragmatic collaboration of the membership to successfully preserve and strengthen the rules-based trading system we all need. Time will tell whether the disruptive emergence of unprecedented tariff escalations will prove to be highly costly to all economies of the world and will ultimately fail to serve the corrective purposes they were intended for. Supachai Panitchpakdi is a veteran Thai politician and former director-general of the World Trade Organization (WTO), as well as a former secretary-general of the UN Conference on Trade and Development (UNCTAD).
The Sun
an hour ago
- Business
- The Sun
IMF raises Malaysia's GDP growth forecast to 4.5% in 2025
KUALA LUMPUR: The International Monetary Fund (IMF) has raised its forecast for Malaysia's real gross domestic product (GDP) growth to 4.5 per cent in 2025 and 4.0 per cent in 2026. In its July 2025 World Economic Outlook (WEO) update released today, titled 'Global Economy: Tenuous Resilience amid Persistent Uncertainty', the IMF said the forecast for 2025 is 0.4 percentage point higher than in the reference forecast of the April 2025 WEO and 0.2 percentage point higher for 2026. Meanwhile, the IMF said that in the emerging market and developing economies, growth is expected to be 4.1 per cent in 2025 and 4.0 per cent in 2026. 'Relative to the forecast in April, growth in 2025 for China is revised upward by 0.8 percentage point to 4.8 per cent. This revision reflects stronger-than-expected activity in the first half of 2025 and the significant reduction in US-China tariffs,' it said. Additionally, it said China's growth in 2026 is also revised upward by 0.2 percentage point to 4.2 per cent, again reflecting the lower effective tariff rates. 'In India, growth is projected to be 6.4 per cent in 2025 and 2026, with both numbers revised slightly upward, reflecting a more benign external environment than assumed in the April reference forecast,' it said. The IMF highlighted that despite global uncertainties, countries should reduce policy-induced uncertainty by promoting clear and transparent trade frameworks. 'Pragmatic cooperation is paramount in instances in which some rules of the international trading system, in their current form, may not be functioning as intended. 'This entails the pursuit of multilateral initiatives on the global commons and modernising trade rules where feasible, while seeking plurilateral or regional solutions on other matters,' it said. Moreover, the IMF said bilateral negotiations can help defuse trade tensions and should aim to reduce trade and investment barriers while not increasing them toward third parties, which could escalate tensions with other trading partners. 'Such negotiations should be pursued with the ultimate aim of addressing the root causes of tensions: specifically, excess external imbalances arising from internal policy choices. This would involve identifying and taking steps to resolve the underlying distortions for a more durable solution. 'Broad subsidies and industrial policies aiming to protect exports can be costly and distortive,' it said. The IMF said central banks must carefully calibrate monetary policies to country-specific circumstances to maintain price and financial stability amid prolonged trade tensions and evolving tariffs. 'In countries imposing tariffs on trading partners -- either by initiating or by retaliating -- these actions constitute supply shocks. 'Hence, central banks in these countries face a difficult trade-off between shielding the real sector and preventing the expected one-off increase in prices from turning into persistently higher inflation. The trade-off becomes more pertinent if inflation is already above target,' it said. According to the report, further easing of monetary policy should then depend on having convincing evidence that inflation and inflation expectations are heading decisively back to target. 'Countries that have not imposed tariffs, by contrast, face a demand shock. Central banks could, in this case, gradually reduce the policy rate,' it said. - Bernama
NZ Herald
an hour ago
- Business
- NZ Herald
Luxon vs Milei: Contrasting economic reforms in NZ and Argentina
Argentina's situation was dire. When Milei took office, inflation was running above 200%. The economy was in recession, foreign reserves were nearly exhausted and the country was once again dependent on an IMF bailout – its ninth default. New Zealand's inflation stood at 4.7%. The economy had contracted, debt was rising and Treasury projected years of deficits. Neither leader holds a parliamentary majority. Luxon heads a three-party coalition. Milei's Libertarian party has no majority in Congress. Both face resistance from entrenched bureaucracies, militant unions, the political class and a mostly hostile media. Once, New Zealand and Argentina shared similar roles – pastoral producers for Britain – and both were among the world's wealthiest nations after World War II. Since then, New Zealand has declined slowly. Argentina fell off a cliff. Luxon favours incremental change through '90-day action plans'. Milei has pursued radical reform that makes Roger Douglas look like a moderate. Despite National's rhetoric, government spending and borrowing are still increasing. In contrast, Argentina has balanced its primary budget before interest payment. New Zealand has 81 portfolios, 28 ministers and 43 core public organisations. Nicola Willis has ruled out abolishing any ministries, saying it would be 'too expensive'. Instead, two new ministries have been created. Milei has abolished 10 – including the ministries for Women, Youth and Culture – reducing Argentina to just eight ministries for 45 million people. Argentina has lifted many foreign investment restrictions. We are still debating the OECD's most restrictive regime. We've set up a Ministry for Regulation that cut red tape for barbers. Meanwhile, the modest Regulatory Standards Bill – limited to publishing non-binding reports – faces hysterical opposition. In his first 100 days, Milei unleashed sweeping deregulation. While our Reserve Bank Governor is on a short-term contract, Milei has declared central bank independence and announced plans to abolish it altogether in favour of the US dollar. There are now 16,000 more civil servants than when National last held office. Image / Jacques Steenkamp, BusinessDesk In New Zealand, there are more than 16,000 more civil servants than when National last held office. In Argentina, the public sector has shed approximately 48,000 staff. Employment is increasing, with 245,000 jobs created in the informal economy, albeit with lesser conditions. Our GDP growth is 0.3%. The IMF expects Argentina's economy to grow 7% this year – a rate New Zealand has never achieved. Our inflation is 2.1%, though food prices have risen 4.6% in the past year. In Argentina, annual inflation has dropped to around 118%, and monthly inflation has fallen from 25% to 2.4%. We run structural deficits. Argentina has a small primary fiscal surplus. Our debt-to-GDP ratio is rising. Argentina's is falling. In New Zealand, the Ministry of Housing reports homelessness is increasing. In Argentina, Milei has not denied the social cost has been high: rising poverty, wage erosion, pensioner protests. Milei says that curing a century of economic mismanagement requires short-term pain for long-term gain. It appears he is correct. Extreme poverty has dropped from 18% to around 8%. Our Treasury projects unbroken deficits – an unsustainable path. The OECD says that if Argentina stays its course, it will achieve sustained growth above the Latin American average. Politically, both leaders face protests. In New Zealand, the latest Taxpayers' Union–Curia poll has Luxon statistically tied with Hipkins at 19.7%. Sir John Key warns National faces a difficult re-election. In Argentina, Milei is a polarising figure. No New Zealand politician has his approval rating, between 47% and 54% the highest of any politician. His party is forecast to gain seats in next year's midterms. Commentators credit Milei's popularity to courage and clarity. He's a trained economist and a believer in markets. At Davos, Milei said: 'The state is not the solution; it is the problem … Don't be afraid of freedom. Trust in the superior morality of free markets.' We have no idea what Luxon believes. Nicola Willis has said she's no Ruth Richardson, preferring Bill English as her model. But English followed Michael Cullen, who delivered nine straight surpluses and created KiwiSaver and the Super Fund. English enacted no major reform. He failed to lift productivity or tackle our structural problems. Tinkering won't fix the problems this Government inherited. What Luxon and Willis have yet to grasp is that small change that solves nothing only prolongs controversy. High-quality reform ends the debate. Milei is popular not just because his reforms are needed but for his stand against corruption and the political class. Twenty years ago, I spoke in Buenos Aires about New Zealand's reforms. The Argentinians were incredulous. They said such reforms would never work in Argentina. To those who now say Argentina's reforms would never work here, I say the same thing: 'Yes, they can.'
Time of India
2 hours ago
- Business
- Time of India
IMF lifts India's FY26 outlook to 6.4%, raises FY27 growth projection on favourable external factors
The International Monetary Fund (IMF) Tuesday raised India's economic growth forecast to 6.4% for both FY26 and FY27, citing a more favourable external environment than anticipated in the April outlook. The earlier projections stood at 6.2% for FY26 and 6.3% for FY27. Explore courses from Top Institutes in Please select course: Select a Course Category Based on the IMF projections, India is expected to record the highest growth rate among advanced economies and emerging markets and developing ones over the current and next fiscal year. 'In India, growth is projected to be 6.4% in 2025 and 2026, with both numbers revised slightly upward, reflecting a more benign external environment than assumed in the April reference forecast,' the IMF said in its latest World Economic Outlook. Live Events Below RBI's estimate However, the IMF projections are slightly below the Reserve Bank of India's estimate of 6.5% for FY26. According to the National Statistical Office, India's gross domestic product (GDP) grew 6.5% in FY25. On a calendar year basis, the IMF anticipates India's economy to grow 6.7% in 2025 and 6.4% in 2026. The IMF raised global growth outlook as well, projecting 3% growth in 2025, up from 2.8%, and 3.1% in 2026 compared to April forecast of 3%. 'This reflects stronger-than-expected front-loading in anticipation of higher tariffs; lower average effective US tariff rates than announced in April; an improvement in financial conditions, including due to a weaker US dollar; and fiscal expansion in some major jurisdictions,' the IMF said. The IMF highlighted recent US trade policy developments as influential. President Donald Trump's April 2 announcement of reciprocal tariffs, including a 26% duty on India, was followed by a 90-day pause until July 9, later extended to August 1. 'Pause in higher tariffs for most of its trading partners and a deescalation of trade tensions with China in May modestly reduced the US effective tariff rate from 24% to about 17%,' said Pierre-Olivier Gourinchas, chief economist at IMF. 'This modest decline in trade tensions, however fragile, has contributed to the resilience of the global economy so far. Uncertainty prevails However, global policy remains highly uncertain, with only a few countries having reached fully-fleshed out trade agreements with the US, he added. The US growth forecast has been revised upward to 1.9% for 2025, driven by lower tariffs than those announced on April 2 and looser financial conditions, with some offset from a faster-than-anticipated slowdown in private demand and weaker immigration, the IMF mentioned. Growth is expected to rise slightly to 2% in 2026, supported by a boost from the One Big Beautiful Bill Act (OBBBA), which is expected to stimulate corporate investment through tax incentives. 'The IMF staff estimates that the OBBBA could raise US output by about 0.5% on average over the WEO horizon through 2030, relative to a baseline without this fiscal package,' added the IMF. China's economic growth forecast has also been upgraded to 4.8% for 2025, due to stronger-than-expected performance in the first half of 2025 and significant reduction in US-China tariffs, according to the IMF. Growth in 2026 is expected at 4.2%, driven by lower effective tariff rates.
The Mainichi
2 hours ago
- Business
- The Mainichi
IMF upgrades outlook for global economy, citing less-than-expected damage from Trump's trade wars
WASHINGTON (AP) -- The International Monetary Fund is upgrading the economic outlook for the United States and the world this year and next because President Donald Trump's protectionist trade policies have so far proven less damaging than expected. The IMF now forecasts 3% growth for the global economy this year. That is down from 3.3% in 2024 but an improvement on the 2.8% it had forecast for 2025 back in April. The 191-country lender, which works to promote growth, stabilize the world financial system and reduce poverty, expects world growth to come in at 3.1% next year, up a tick from the 3% it had forecast three months ago. Trump's decision on April 2 -- "Liberation Day,'' the president called it -- to impose taxes of 10% or more on U.S. imports from most of the world's countries had been expected to be a bigger drag on global growth. But the damage was limited, the IMF said, partly because many U.S. importers scrambled to bring in foreign goods before Trump's tariffs took effect and partly because Trump ended up suspending his biggest levies (including a 145% duty on Chinese goods). "This modest decline in trade tensions, however fragile, has contributed to the resilience of the global economy so far," IMF chief economist Pierre-Olivier Gourinchas said at a press conference Tuesday. "This resilience is welcome, but it is also tenuous. While the trade shock could turn out to be less severe than initially feared, it is still sizeable, and evidence is mounting that it is hurting the global economy.'' Tariffs raised $108 billion for the U.S. Treasury from October through June, nearly double the $55.6 billion they brought during the same period of the previous fiscal year. Global growth of around 3% is below pre-pandemic average and the world economy would be growing faster without Trump's trade wars. The IMF modestly upped its forecast for U.S. economic growth to 1.9% this year and 2% in 2026 when the big tax cuts Trump signed into law July 4 are expected to provide "a near-term boost.'' The Chinese economy, the world's second biggest, is expected to grow 4.8% this year, a hefty upgrade from the 4% the IMF had forecast in April. China is getting a boost from lower-than-expected U.S. tariffs and from government spending. The 20 economies that share the euro currency are collectively expected to expand 1%, up from the 0.8% the IMF had forecast in April. But a big chunk of that growth is coming from a surge of pharmaceutical exports from Ireland, which were timed to beat Trump's expected tariffs on drugs. Japan remains in a slow-growth rut and is expected to eke an expansion of just 0.7% this year and 0.5% next. India is once again expected to be the world's fastest-growing major economy, expanding a forecast 6.4% this year and next. Trump has pressured Japan and the European Union to accept 15% U.S. tariffs on their exports. Indonesia, Vietnam and the Philippines also agreed to accept stiff U.S. tariffs. More such deals are expected before Friday when Trump will slap even higher tariffs on countries that don't agree make concessions. Trump's protectionism is buffeting global commerce. The IMF upgraded its forecast for growth in world trade, measured by volume, to 2.6% this year. That is up from the 1.7% it had predicted in April and reflects a surge in shipments as exporters tried to beat the tariff crunch. But eventually the higher U.S. levies are expected to take a toll. The IMF sees trade growing just 1.9% next year, down from the 2.5% it had forecast in April. Trump has also unsettled financial markets by openly and repeatedly criticizing Federal Reserve Chair Jerome Powell for the Fed's reluctance to cut American interest rates. Powell has said that the central bank must wait to better understands the impact of Trump's tariffs on inflation. That same message was delivered last week by the European Central Bank, which is also holding off on rate calls to measure the impact of Trump's tariffs. At the press conference Tuesday, IMF chief economist Gourinchas spoke up in favor of keeping central banks like the Fed independent from political pressure. "The evidence is overwhelming that independent central banks, with a narrow mandate to pursue price and economic stability, are essential'' to containing inflationary pressure, he said. The Fed and other central banks raised rates after inflation flared up in 2021 and 2022. They managed a so-called soft landing -- bringing inflation down without causing a recession. "That central banks around the world achieved a successful 'soft landing' despite the recent surge in inflation owes a great deal to their independence and hard-earned credibility," Gourinchas said.
