The managing director of the International Monetary Fund has delivered one of her strongest condemnations of the protectionist policies of Donald Trump, warning that putting up barriers to trade would be a “self-inflicted wound” to an improving global economy.

Christine Lagarde used a speech in Brussels to launch a strong attack on the go-it-alone approach championed by the US president during his election battle with Hillary Clinton.

“In our hyper-connected world, national policies tend to have major spillovers across borders. We are all sitting figuratively in the same boat. Which is why we need to encourage countries to support strong international cooperation,” she said.

Speaking before the IMF’s spring meeting next week, Lagarde added that international cooperation had been vital in preventing the deep recession of 2008-09 turning into a second Great Depression.

After Trump picked strong critics of the IMF to be key members of his treasury team, Lagarde defended her organisation, saying it had helped foster the international cooperation that had underpinned a “phenomenal rise in incomes and living standards around the world”.

She added: “More recently, we worked together to ensure that the great recession did not become another Great Depression. Cooperation through a multilateral framework has benefited every country. Fostering more resilient growth therefore requires more international cooperation – not less.”

Trump has threatened to put swingeing tariffs on Chinese goods and to impose a tax on imports coming into the US, as part of an economic strategy designed to put America first.

Lagarde said cooperation was a better way of dealing with the global imbalances that had resulted in some countries, such as China and Germany, running trade surpluses while others, including the US, run deficits. This meant working together to ensure that countries observed a level playing field, including by avoiding protectionist measures.

“Restricting trade would be a self-inflicted wound that disrupts supply chains, hurts global output, and inflates the prices of production materials and consumer goods. And low-income households are hurt the most as they consume the largest part of their incomes,” she said.



The IMF will release its half-yearly health check on the global economy next week, but Lagarde hinted that the growth prospects for 2017 would be revised up.

After six years of disappointing growth, Lagarde said the global economy was gaining momentum, holding out the prospect of more jobs and higher incomes.

She pointed out that the outlook had improved across the developed world, including in Europe, which had previously been lagging behind the US. Even so, emerging and developing countries would contribute more than 75% of global GDP growth in 2017.

“At the same time, there are clear downside risks: political uncertainty, including in Europe; the sword of protectionism hanging over global trade; and tighter global financial conditions that could trigger disruptive capital outflows from emerging and developing economies,” Lagarde said.

Weak productivity remained a severe drag on strong and inclusive growth, she added, largely because of population ageing, the slowdown in trade and weak private investment since the financial crisis.