Acting IMF chief says ‘global economy is fragile,’ urging US and China end trade war

Acting IMF Managing Director David Lipton, in a veiled appeal Thursday on CNBC, called on the U.S. and China to come to an agreement and end their yearlong trade war.

Lipton told “Squawk on the Street ” that the global economic slowdown has been “certainly affected by the trade tensions,” though he did not mention the U.S. or China by name.

The latest round of trade talks between the world’s two biggest economies on Tuesday and Wednesday in Shanghai made little progress. Negotiations are set to resume in September in Washington.

Tensions between the White House and Chinese technology giants may also be contributing to the global economic slowdown, Lipton said.

“It’s time for the countries to have dialogue, to reach agreements, to try to find a way through this, since the global economy is fragile,” he said.

Global trade has been lower in the first six months of this year compared with the same period in 2018, Lipton said, adding that it’s a “time for vigilance.”

“Global trade is actually contracting, and that is not a good situation,” he warned.

Lipton said that if a global recession were to start, central banks, including the Federal Reserve, would be in weakened positions to fight it because of all the easy monetary policies.

Case in point, the Fed lowered interest rates by 0.25% on Wednesday.

Lipton moved into the acting director role after Christine Lagarde resigned as head of the International Monetary Fund. Largarde has been nominated to be the next president of the European Central Bank.

(CNBC)