Tariffs aren't answer to imbalances: IMF
Global current account balances widened sharply in 2024, reversing a narrowing under way since the global financial crisis of 2008-2009, the International Monetary Fund (IMF) said on Tuesday, warning that tariffs were not the answer.
In its annual External Sector Report, which assesses imbalances in the 30 largest economies, the IMF noted that external surpluses or deficits were not necessarily a problem but could cause risks if they became excessive.
It said prolonged domestic imbalances, continued fiscal policy uncertainty, and escalating trade tensions could deteriorate global risk sentiment and elevate financial stress, hurting both debtor and creditor nations.
The report took aim at US President Donald Trump's imposition of higher import tariffs against nearly every trading partner, which his administration says is aimed at increasing revenues and righting longstanding trade deficits.
"A further escalation of the trade war would have significant macroeconomic effects," it said, noting that higher tariffs would reduce global demand in the short term and add to inflationary pressures through rising import prices.
Rising geopolitical tensions could also trigger shifts in the international monetary system (IMS), which in turn could undermine financial stability, it said.
This year's report, based on 2024 data, showed the widening of global current account balances was due largely to increased excess balances in the world's three largest economies – the US, China and the euro area.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
an hour ago
- Express Tribune
DOGE deploys AI to target thousands of federal regulations
The Department of Government Efficiency (DOGE) is reportedly using a new artificial intelligence tool aimed at significantly reducing the number of federal regulations. According to a report by The Washington Post, a PowerPoint presentation dated 1 July outlines that the DOGE AI Deregulation Decision Tool is designed to analyse approximately 200,000 existing federal regulations. Its objective: to identify rules no longer required by law and facilitate the removal of half of them by the first anniversary of President Donald Trump's return to office. The document suggests that the initiative is already in motion. According to the presentation, the tool has been deployed to review regulations at the Department of Housing and Urban Development and was responsible for drafting '100% of deregulations' at the Consumer Financial Protection Bureau. Although the White House has not formally endorsed the full scope of the plan, a spokesperson acknowledged the work underway. DOGE has built an AI tool to slash federal regulations | TechCrunch — TechCrunch (@TechCrunch) July 27, 2025 'No single plan has been approved or greenlit,' they stated, adding that the DOGE team represents 'the best and brightest in the business.' The AI tool is the latest in a line of technologies developed under the DOGE umbrella, a body that was initially led by Elon Musk during the early months of Trump's current term. Previous systems attributed to DOGE have drawn scrutiny, including a tool designed to process Veterans Affairs contracts that was found to generate inflated or fictitious figures. The current effort forms part of a wider push to streamline federal oversight and reshape the role of government in key regulatory sectors. While critics have raised concerns about transparency and potential overreach, supporters argue that the initiative could lead to increased efficiency and economic agility. As of now, the administration has not provided a detailed breakdown of which regulations could be eliminated or how AI decisions are being validated.
Business Recorder
3 hours ago
- Business Recorder
JGBs rebound as traders reassess BOJ rate-hike trajectory
TOKYO: Japan's shorter-dated government bonds rose on Monday, recovering from a sell-off last week, as investors re-evaluated the pace of Bank of Japan's rate hikes. The 10-year JGB yield fell 4.5 basis points (bps) to 1.555%, after surging to 1.605% on Friday, its highest level since October 2008. The five-year yield fell 4 bps to 1.11%. Yields move inversely to bond prices. 'The yields rose last week on expectations that the BOJ would raise interest rates by the end of this year,' said Naoya Hasegawa, chief bond strategist at Okasan Securities. 'But investors wanted to wait and see the central bank's message about the next interest rate hike at the end of the policy meeting this week.' The BOJ will hold its next policy meeting on July 30-31, and the market expects the central bank to hold its policy rate unchanged. But a trade deal to lower the hefty tariffs U.S. President Donald Trump threatened to impose on goods from Japan opened scope for the BOJ to raise interest rates again this year, sources said. Swap rates indicated a nearly 80% chance of the BOJ raising rates by 25 basis points to 0.75% at its policy meeting in December. 'The market wanted to know if there is a higher chance of the BOJ raising rates earlier than December,' Haseagawa said. The 10-year JGB futures rose 0.48 yen to 137.91. The two-year JGB yield fell 1 bp to 0.845%. Yields on super-long dated bonds rose, with the 30-year JGB yield rising 1.5 bps to 3.075%. The 40-year JGB yield rose 1.5 bps to 3.365%. The 20-year JGBs have not been priced yet, as of 0540 GMT.
Business Recorder
3 hours ago
- Business Recorder
Japan's Nikkei falls as investors take profits ahead of corporate earnings
TOKYO: Japan's Nikkei share average erased early gains to trade lower on Monday, as investors locked in profits following a recent rally and shifted their focus to upcoming corporate earnings. As of 0217 GMT, the Nikkei was down 0.8% at 41,115.60, after rising as much as 0.2% earlier in the session. The broader Topix slipped 0.45% at 2,938.55. 'Investors sold stocks to book profits from a recent rally; that's a short answer to today's declines,' said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Intelligence Laboratory. 'But they sold stocks because the shares jumped last week, and were concerned that corporate earnings may not justify the current level of the equities.' The Nikkei climbed to a one-year high last week after Japan and the United States struck a deal to lower the hefty tariffs U.S. President Donald Trump threatened to impose on goods from Japan. Chip-related shares led the declines, with Advantest slipping 7.66% to become the biggest drag for the Nikkei. Screen Holdings fell 7.24% after the chip-making equipment maker reported a 12.2% decline in its latest quarterly operating profit. The banking sector fell 1.78% to become the worst performer among the Tokyo Stock Exchange's 33 industry sub-indexes. Bucking the trend, Fanuc jumped 5.6% to become the top percentage gainer in the Nikkei, after the robot maker's latest quarterly operating profit jumped nearly 30%. The company also said that its forecast factored in the 15% U.S. tariff set to take effect on August 1. Of the more than 1,600 stocks trading on the TSE's prime section, 46% rose and 49% fell, with 4% trading flat.
