Protectionism, Debt are Huge Threats to World Economy - EU

The largest threats to global economic expansion are government debt and protectionist tendencies, according to European Union economy commissioner Pierre Moscovici.

“The two main risks for growth, which is now very solid all over the world, are on the one hand protectionism and trade tensions, and on the other hand debt,” Moscovici said. “There is no trade war for the time being, so that's good.”

The IMF recently cautioned that the world's debt has swelled to a record $164 trillion, a trend that could make it more difficult for countries to respond to the next recession. Global public and private debt increased to 225 percent of worldwide economic output in 2016, the fund said on Wednesday in its semi-annual Fiscal Monitor report. The fund also cautioned that the global commercial order risked being “torn apart” by trade wars.

The global debt burden clouded the IMF's otherwise upbeat outlook of the world economy, which is in its strongest upswing since 2011. The fund expects growth of 3.9 percent in 2018 and 2019.

U.S. President Donald Trump is pushing for a crackdown on China and has announced tariffs on imports of steel and aluminum. The EU is seeking a permanent exemption from the metals levies after Trump granted a waiver to the bloc until May 1 and left open the possibility of a longer exclusion. The European Commission, the EU's executive branch in Brussels, has said that failure to gain a longer exemption from the U.S. metal-import duties would lead to a tit-for-tat response by the bloc.

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