Growing Protectionism Poses Dire Risk To Global Economy

Czech Industry and Trade Ministry, CzechTrade

Prague, Aug 9 (CTK) – Growing protectionism in trade relations between the world’s greatest economies is the main risk for the global economy, German and Czech central banks’ heads, Jens Weidmann and Jiri Rusnok, respectively, have agreed.


The Czech National Bank (CNB) provided the information to CTK after Weidmann’s visit to the central bank.


Such development is alarming because it comes at a time when some economies have not yet fully overcome the consequences of the financial crisis, the two officials said.


“With (Bundesbank) President Weidmann, we have found a common language in many areas,” Rusnok said after the meeting.


“We agreed that the current expansion is an ideal time to make reforms that are needed not only in our economies but also in the eurozone whose long-term prosperity is of key importance for Germany and the Czech Republic,” Rusnok said.


Both sides see a high level of public debt as a factor limiting manoeuvring space for the budgetary policy.


High public debt levels make it more difficult for governments to spend money on investments, weaken resistance, and at the same time raise uncertainty, which may slow down the economic growth in the long run, said Weidmann.


Institutional reforms are needed to strengthen the monetary union but every viable reform should be carried out in such a way that acts and their consequences be in agreement, he added.


Weidmann is the fifth Deutsche Bundesbank president to have visited the CNB.


Weidman, member of the European Central Bank (ECB) Board of Governors, said in May he was ready to replace Mario Draghi in the post of ECB president next autumn.