MNI: Surplus, Deficit Nations Need To Adjust Policies -Lagarde

Surplus and deficit nations need to act to defuse global trade tensions, European Central Bank President Christine Lagarde said in a speech in Beijing on Wednesday.

“We must pursue cooperative solutions – even in the face of geopolitical differences. And that means both surplus and deficit countries must take responsibility and play their part,” Lagarde said at the People's Bank of China in Beijing,

"All countries should examine how their structural and fiscal policies can be adjusted to reduce their own role in fuelling trade tensions."

If global trade were to fragment into competing blocs, world trade would contract significantly, with every major economy worse off, Lagarde said.

"Given national security considerations and the experience during the pandemic, a certain degree of de-risking is here to stay. Few countries are willing to remain dependent on others for strategic industries,” she said, though she called for countries to uphold the multilateral framework.

Central banks can also play a role, Lagarde said.

“We can stand firm as pillars of international cooperation in an era when such cooperation is hard to come by. And we can continue to deliver stability-oriented policies in a world marked by rising volatility and instability.”