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Countries should help those hurt by free trade


The IMF in its World Economic Outlook for 2017, published yesterday said Emerging Markets and Developing Economies (EMDE) growth is now estimated at 4.1 percent in 2016, and is projected to reach 4.5 percent for 2017, around 0.1 percentage point weaker than the October forecast.

"Nevertheless, these economies can still get the most out of a weaker growth impulse from external conditions by strengthening their institutional frameworks, protecting trade integration, permitting exchange rate flexibility, and containing vulnerabilities arising from high current account deficits and external borrowing, as well as large public debt", International Monetary Fund said.

The IMF, the World Bank and the WTO said in their joint report that the anti-trade mood had been evident long before last year's USA presidential election but said this had followed a long period when trade had brought benefits to both developed and developing countries.

Uncertainty over global trade is particularly high. However, a prolonged period of disappointing economic growth and inadequate attention to those left behind by forces such as trade, globalisation, and technology has spurred increased scepticism over open trade in some quarters. Key policy initiatives such as training, temporary income support, job search assistance, and targeted trade adjustment assistance are important. She said: "Our forecast for 2017 and 2018 is certainly more favourable than what we have seen in 2016, and probably a bit more so than we had forecast previously". "Approaches beyond labour market policies - such as education, housing, and regional policy - are also needed".

"A strong global trading system centered on the WTO remains critical", the report stressed. "Strong, well-enforced trade rules help to promote competition and to reassure citizens that global trade is evenhanded".


"Workers displaced from manufacturing tend to be older, less educated and longer tenured in the lost job than workers displaced from other sectors, and in turn tend to take longer to return to work", they added.

The report recommended more active government policies beyond traditional unemployment income benefits to retrain and redeploy workers idled by imports, including programs to encourage more worker mobility.

The decline in labour's share of national income was also reported in 29 of the world's 50 largest economies between 1991 and 2014.

"With potentially persistent structural shifts occurring in the global economy, emerging market and developing economies may face a less supportive external environment going forward than they experienced for long stretches of the post-2000 period", the International Monetary Fund said.

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