WASHINGTON: The head of the International Monetary Fund said Wednesday that after six years of disappointing growth, the world economy is finally gaining momentum. But she warned of potential threats, from political uncertainty in Europe to protectionism that could hinder trade.
Christine Lagarde, the IMF’s managing director, said there is a critical need for more international cooperation. Restricting trade flows would be a “self-inflicted wound” that would harm workers and consumers, she said in a speech previewing next week’s meetings in Washington of the 189-nation IMF and its sister lending organization, the World Bank.
In the speech in Brussels, Lagarde did not single out any country for criticism on the issue of protectionism. In his campaign, President Donald Trump had vowed to impose punitive tariffs on goods from countries that he thinks harm American workers by flouting trade rules.
Trump has threatened to slap tariffs as high as 45 percent on goods from China and Mexico unless those nations stop practices that he says violate trade laws.
Resorting to protectionism, Lagarde said, would disrupt supply chains for domestic companies and inflate prices that companies and consumers must pay. A better approach would be for countries — both those with trade surpluses and those with deficits — to cooperate in pursuing policies to address the imbalances.
“Cooperation means working together to ensure that countries observe a level playing field,” Lagarde said.
The Geneva-based World Trade Organization released a report Wednesday predicting that global trade will rebound this year and in 2018 after a lackluster 2016. The WTO estimated that trade flows would increase 2.4 percent this year, up from 1.3 percent in 2016, which was the weakest figure since the height of the financial crisis in 2008.
Next week’s finance meetings will likely be dominated by debate over how the global financial system should respond to trade and other economic proposals being pushed by the new Trump administration. The United States will be represented at the discussions by Treasury Secretary Steven Mnuchin and Federal Reserve Chair Janet Yellen.
In an interview with Bloomberg television, Lagarde cautioned against any move by the United States to target China as a currency manipulator in a report scheduled to be released in coming days by the Trump administration. She spoke in response to a question about the possibility that the administration could label China a manipulator, something Trump had pledged to do during the campaign but which most analysts say he is unlikely to do now.
Lagarde said a better approach would be to conduct currency assessments in a “cohesive manner.” She noted that the IMF plans to issue a report on exchange rates in July.
In her speech, Lagarde said next week’s meetings will occur at a time when prospects for the global economy are improving after struggling for six years to emerge from the severe downturn triggered by the worst financial crisis since the 1930s.
“After six years of disappointing growth, the world economy is gaining momentum as a cyclical recovery holds out the promise of more jobs, higher incomes and greater prosperity going forward,” Lagarde said in her appearance at Bruegel, an economic research institute in Brussels.
She pointed to stronger manufacturing activity in advanced economies and robust gains in emerging economies, which she said will provide more than three-fourths of expected global growth in 2017.
One of the reasons for optimism is a rebound in the price of commodities which have brought relief to many low-income countries.
“Putting all this together, we see a global economy that has a spring in its step,” Lagarde said, while cautioning that downside risks remain.
She said that in addition to the threat to trade from rising protectionism and political uncertainty in Europe, persistently sluggish growth in productivity — the amount of output per hour of work — remains a problem for the global economy.
Lagarde said that if productivity had grown since 2008 as it had been before the financial crisis, economic output in advanced economies would be 5 percent higher today — the equivalent of adding a country with output larger than Germany to the global economy.
Lagarde said that nations must find ways to reinvigorate productivity, such as investing more in education and infrastructure and providing tax incentives to foster research and development.
IMF leader Lagarde warns against trade protectionism
IMF leader Lagarde warns against trade protectionism
Supply chains reel as carriers halt Gulf routes and impose war risk surcharges in response to Iran-US conflict
RIYADH: Global supply chains were disrupted on March 2 as the US-Iran conflict forced shipping lines and airlines to suspend routes, reroute traffic, and impose emergency surcharges across the Middle East.
As traffic slowed through the Strait of Hormuz and airspace restrictions spread across Gulf hubs, logistics providers halted new container bookings and adjusted operations, driving longer transit times, higher freight costs, and greater uncertainty for cargo owners worldwide.
Ship-tracking data cited by Reuters showed a maritime standstill taking shape near the Hormuz chokepoint, with roughly 150 crude and liquefied natural gas tankers anchored in open waters beyond the strait and additional vessels stationary on both sides, clustered near the coasts of Iraq, Saudi Arabia, and Kuwait, as well as the UAE and Qatar.
Industry guidance warned of heightened naval activity, anchorage congestion and potential insurance volatility, even as no formal international suspension of commercial shipping had been declared.
Rising tensions in the Gulf forced operational pullbacks, with Reuters reporting at least three tankers damaged and one seafarer killed, prompting shipowners to reassess their exposure in regional waters.
Container carriers acted to limit risk, with MSC Mediterranean Shipping Co. suspending new bookings for Middle East cargo amid security concerns and network uncertainty.
A.P. Moller–Maersk paused sailings through the Suez Canal and Bab el-Mandeb and suspended vessel crossings through the Strait of Hormuz, attributing the move to the worsening security situation following the start of the US-Israeli attack on Iran.
Rival operators began diverting vessels around the Cape of Good Hope, extending voyage times between Asia and Europe and tightening effective capacity. The longer routings are increasing fuel consumption and disrupting equipment repositioning cycles, adding strain to already stretched container availability in key export markets.
Freight costs rose further after Hapag-Lloyd introduced a formal War Risk Surcharge for cargo moving to and from the Upper Gulf, Arabian Gulf and Persian Gulf, citing what it described as the “dynamic situation around the Strait of Hormuz” and associated operational adjustments across its network.
The surcharge, effective March 2 until further notice, is set at $1,500 per twenty-foot equivalent unit for standard containers and $3,500 per unit for reefer containers and special equipment.
The surcharge will apply to any booking made on or after March 2 that has not yet shipped, as well as cargo already in transit to or from affected Gulf regions. It will be paid by the booking party and excludes shipments regulated by the Federal Maritime Commission or SSE.
France-based shipping group CMA CGM said March 2 it will introduce an “Emergency Conflict Surcharge,” effective immediately, citing escalating security risks in the region. The surcharge will be set at $2,000 per 20-foot dry container, $3,000 per 40-foot dry container, and $4,000 per reefer or special equipment container.
The measure applies to cargo moving to and from Iraq, Bahrain, and Kuwait, as well as Yemen, Qatar, Oman, the UAE, and Saudi Arabia. It also covers shipments to Jordan, Egypt via the Port of Ain Sokhna, Djibouti, Sudan, and Eritrea, encompassing trade linked to Gulf and Red Sea countries.
On the port side, DP World said operations had resumed at Jebel Ali Port in the UAE following precautionary disruption. The reopening restored activity at the Gulf’s largest transshipment hub, though the broader impact of rerouted vessels, suspended bookings and insurance constraints continues to limit throughput predictability.
Marine insurers added to the strain by issuing notices canceling war-risk cover for vessels operating in Iranian waters and surrounding areas, with changes taking effect on March 5.
The withdrawal of coverage complicates voyage approvals and introduces further pricing volatility for shipowners and charterers considering calls within the region.
Air freight networks have also been affected. Widespread flight cancellations and airspace restrictions across the Middle East disrupted passenger and cargo flows through key hubs, including Dubai.
FedEx said it had temporarily suspended services in specific Middle East markets, including Bahrain, Israel, and Qatar, as well as Saudi Arabia, Kuwait, and the UAE, and halted pickup and delivery services in several Gulf countries due to escalating tensions and airspace closures, affecting time-sensitive shipments across several nations.
Air cargo disruption appears to be significant. Ryan Petersen, CEO of Flexport, a US multinational corporation that focuses on supply chain management and logistics, wrote on X on March 2 that “18 percent of global air freight capacity has been taken out of the market by conflict in the Middle East this weekend,” highlighting the scale of network dislocation as airspace closures and flight cancellations ripple across Gulf hubs.
While the figure has not been independently verified, it underscores the degree to which capacity constraints are tightening for time-sensitive shipments, including pharmaceuticals, electronics and industrial components.
Data from Lloyd’s List Intelligence underscores the scale of disruption to maritime throughput. Daily deadweight tonnage of tankers and gas carriers transiting the Strait of Hormuz fell sharply by March 1, reflecting what industry sources describe as a de facto halt in normal vessel movements.
The combined effect of halted transits, booking suspensions, war-risk pricing measures and air service interruptions is beginning to ripple through global supply chains. Energy exports remain the most immediately exposed given the strategic importance of the Strait of Hormuz, but sectors dependent on just-in-time inventory, from manufacturing to retail, are also facing longer lead times and rising logistics costs.
As of March 2, carriers and freight operators were prioritizing crew safety and asset protection while monitoring military developments. The duration of the conflict will determine whether the current disruption remains a short-term operational shock or develops into a prolonged restructuring of trade routes serving the Middle East.
