The main takeaway from the IMF and World Bank Group annual meeting in Bali, which hosted financial ministers and central bank governors from around the world this weekend, was that global trade tensions were having a profound effect on global growth and need to be solved.

Most of the participants – save for China and Mexico – seemed united and in agreement that trade talks have to continue. Bank of Japan Governor Haruhiko Kuroda stated that it was essential to have dialogue on trade while at the same time, the president of Brazil’s central bank, Ilan Goldfajn, noted that the trade wars were one of the biggest threats to emerging markets. Indonesia’s president Jokowi Widodo said starkly that “winter is coming” for the global economy if there is no solution on trade.

However, not everybody was prepared to find a solution at any cost. Bank of China governor Yi Gang stated that he was preparing for the worst, despite still seeking a constructive resolution to the problem. Gang stated at the meeting: “You see a lot of people in China now preparing for this trade tension to be a prolonged situation. The downside risks from trade tensions are significant.”

Mexico also stepped in to voice its support for China. Former Mexican president Ernesto Zedillo told China that they should follow the example set by Mexico and Canada during their negotiations with the United States, because they both were able to secure the terms that they wanted, even though some may disagree violently with this hot take.

Zedillo said, “Mexico and Canada made clear that they’d rather not have Nafta than having the deal that the U.S. wanted. In the end, Mexico and Canada got their way in every single issue that had been drawn as a red line. So I hope China doesn’t blink.”

In any case, IMF managing director Christine Lagarde made it clear in an interview with Bloomberg  following the meetings what the key priority is: “Our message was very clear: de-escalate the tensions.”

The International Monetary and Financial Committee which advises the IMF on policy, concluded that even though the global economy seemed strong, the outlook is definitely being clouded by “heightened trade tensions and ongoing geopolitical concerns, with tighter financial conditions particularly affecting many emerging market in developing countries”.

Rising interest rates were also a topic of discussion. Emerging market economies made note of the fact that rising rates in the US were “causing pain”. Officials representing Colombia and Mexico echoed the sentiment of Indonesia central bank governor Perry Warjiyo, who called for better synchronization amongst global monetary policy and a multilateral response to protectionist headwinds.

There seemed to be very little chance of a resolution between the US and China when the meeting wrapped up on Sunday, so  representatives from Brazil and France were forced to start taking more of a longer-term view. They both acknowledged that short-term volatility as a result of tensions may lead to longer term stability. Brazil’s representative said that emerging markets shouldn’t complain because normalization now may help prevent sudden changes at later dates.

Bank of France Governor Francois Villeroy de Galhau concluded: “We are moving from synchronized growth to economic divergence.”

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