By David Lawder
WASHINGTON World finance leaders on Thursday decried the growing populist backlash against globalization and pledged to take steps to make trade and economic integration benefit more people currently left behind.Their comments at the start of the International Monetary Fund and World Bank fall meetings signaled frustration with persistently low growth rates and the surge of public anger over free trade and other pillars of the global economic system. The meetings are the first since Britain voted in June to leave the European Union and U.S. billionaire Donald Trump secured the Republican presidential nomination with a campaign that attacked trade deals."More and more, people don't trust their elites. They don't trust their economic leaders, and they don't trust their political leaders," German Finance Minister Wolfgang Schaeuble said during an IMF panel discussion in Washington."In the UK, everyone from the elites told the people, 'don't vote for a Brexit.' But they did."Schaeuble said Germany was trying to "hold Europe together" in the face of rising nationalism, and failure to do so would bode poorly for global economic cooperation.IMF Managing Director Christine Lagarde launched the meetings by renewing her call for countries to further boost growth by increasing spending when possible, keeping interest rates extraordinarily low and implementing pro-business reforms aimed at improving economic efficiency.
Lagarde singled out Canada, Germany and South Korea as among the nations that could afford to sustainably increase spending, but said that others with no additional capacity could rearrange their budgets towards infrastructure and education programs. The IMF this week kept its global growth forecast unchanged at a relatively low 3.1 percent for 2016 and 3.4 percent for 2017, noting that the U.S. economy had performed worse than forecast while some emerging markets had done somewhat better.On Thursday, Bank of England Governor Mark Carney said policymakers now have a better recognition of the need for their actions to "more immediately, tangibly and clearly, transparently benefit larger segments of the population."
However, he said that a major new global coordinated policy effort was not likely to be struck at the meetings in Washington."I don't think it's realistic, nor do I think it's what people are asking for, that there is a global grand bargain that is struck in an international meeting that then delivers," Carney said on a panel with Lagarde, Schaeuble and People's Bank of China Deputy Governor Yi Gang.DEUTSCHE BANK'S SHADOW
Worries over the health of Deutsche Bank balance sheet cast a shadow over the meetings, with Lagarde saying Germany's largest lender needed to re-examine its business model in an ultra-low interest rate environment.Deutsche (DBKGn.DE) has faced a crisis of confidence since the U.S. Department of Justice late last month demanded $14 billion in fines over its sales of faulty mortgage-backed securities in the run-up to the 2007-2009 financial crisis.The bank is fighting the fine but may have to turn to investors if more money if the penalty is imposed in full. Schaeuble, asked directly whether the German government was prepared to bail out Deutsche, declined to comment, saying it was "the wrong question." (Reporting by David Lawder; Additional reporting by Gernot Heller, Leika Kihara, Jan Strupczewski, Jason Lange and David Chance in Washington; Editing by Paul Simao)
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