UPDATE 1-India Fin Min warns against growing protectionism

(Adds details, quotes)

By Rafael Nam

Oct 13 India’s finance minister warned
on Thursday against the dangers of protectionist tendencies in
developed economies spreading to other parts of the world and
hurting global growth.

Arun Jaitley’s comments came days after the International
Monetary Fund urged policymakers to support global growth by
resisting protectionist forces.

Growing frustration with persistently low growth rates,
stagnant wages and diminishing job security has sparked a
popular uprising in Europe and the United States against free
trade and globalisation, which critics blame for worsening
income and social inequities.

Addressing a gathering of finance officials of the BRICS
group of emerging nations, Jaitley singled out Britain’s vote to
leave the European Union, as well as aggressive criticism of
trade deals in the U.S. presidential election.

“Part of the developed world is moving towards
protectionism,” Jaitley said. “If developing countries see a
trend of protectionism, the spillover impact on the policies in
other parts of the world would be adverse.”

After its June vote to leave the European Union, Britain
last week signalled capping immigration. Free trade has also
become a political taboo in the United States, with Republican
presidential candidate Donald Trump championing an “America
First” policy.

Protectionist rhetoric has already rattled financial
markets, which some investors say could depress an already weak
and fragile world economy.

Underscoring their concern, the World Trade Organization
last month slashed its global trade volume growth forecast to
the slowest pace since 2007, saying it expected it to rise just
1.7 percent this year, down from the 2.8 percent it forecast in
April.

Jaitley, however, expressed hope that economic needs would
prevent countries such as the U.S. from following through on
pledges to renegotiate trade deals and enact punitive tariffs.

“The tenor of the debate is more protectionist during
elections and much less when you get back to business as usual,”
he said. “Therefore we have to keep our fingers crossed this
time and hope for that the tenor of free trade returns back once
the heat of the election is over.”

(Writing by Rajesh Kumar Singh; Editing by Sanjeev Miglani and
Kim Coghill)

Leave a Reply