HONG KONG (Reuters) - The International Monetary Fund (IMF) is optimistic on the outlook for global growth but warned darker clouds are looming due to fading fiscal stimulus and rising interest rates, the fund's Managing Director Christine Lagarde said on Wednesday.
"History shows that import restrictions hurt everyone, especially poorer consumers," Lagarde said.
"Not only do they lead to more expensive products and more limited choices, but they also prevent trade from playing its essential role in boosting productivity and spreading new technologies."
The best way to tackle global imbalances is to use fiscal tools or structural reforms, she said, adding that the World Trade Organization's rules were in danger of being "torn apart", which would be "an inexcusable, collective policy failure."
Policymakers need to commit to a level playing field and resolve disputes without using exceptional measures, she said.
The reality for 2018 and 2019 was that momentum would eventually slow due to fading fiscal stimulus, rising interest rates and tighter financial conditions, Lagarde said.
New analysis by the IMF showed that global debt had reached an all-time high of $164 trillion, 40 percent higher than in 2007, with China accounting for just over half of that increase.
Lagarde said economies needed to reduce government deficits, strengthen fiscal frameworks and place public debt on a gradual downward path.
Housing markets in major cities worldwide were increasingly moving in tandem, with Lagarde warning that could amplify any financial and macroeconomic shocks coming from any one country.
(Reporting by Anne Marie Roantree and Venus Wu; Editing by Jacqueline Wong)
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