The Daily Update - Legarde and Draghi Warnings / Made in Vietnam ... Sort Of !

Yesterday Mario Draghi and Christine Lagarde both gave stark warnings about the global outlook and the increasing headwinds that the world economy could face. At a conference, Lagarde told the audience ‘Global growth has been subdued for more than six years and the largest economies in the world are putting up, or threatening to put up, new trade barriers. And this might be the beginning of something else, which might affect us all in a more broad way’ adding ‘These troubling developments will create headwinds for all, but certainly for the CESEE (central, eastern and south-eastern European) growth model, a model that has relied on openness and integration’.

Draghi, who gave the opening address to the CESEE conference, was just as blunt about what could be in store in the future. ‘Global trade has faced headwinds in recent years as trade-restrictive measures have outpaced liberalising measures’ he said, going on to tell the conference ‘The effect of tariffs could be amplified, as a large share of goods cross borders multiple times during the production process. The main long-term challenge is moving towards a more balanced growth and financing model, which is more reliant on domestic innovation and on higher investment spending than it has been so far’.

In other news, Vietnam has accused China of foul play in order to avoid Trump's inspired tariffs. They claim China has been using fake ‘Made-in-Vietnam’ labels on dozens of products ranging from agriculture, textiles and steel.

A spokesman for Louis Vuitton was quoted as saying ’Now you know how we feel’.

Jokes apart this has serious implications for Vietnam who are scared of being punished by the US for allowing mislabelled Chinese products to flow into the US particularly after being put on the US Treasury’s watch list for currency manipulation last month. The fear is a whole cottage industry for circumventing US tariffs will bloom in Vietnam causing further friction.

So much for ‘fake news’.

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