Don’t Scapegoat Globalization, Bank of Italy Chief Warns
(Bloomberg) --
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Bank of Italy Governor Fabio Panetta warned against scapegoating globalization and said tariffs won’t solve the world’s economic challenges.
“We must avoid the illusion that blanket measures erecting protectionist barriers are the solution to our problems,” he told a conference in Rome on Friday. “Attempts to divide the global economy into rival blocs would do more harm than good,” he said.
His comments come 10 days after Donald Trump’s victory in US elections after a campaign that saw the former president pledge 60% tariffs on China and as much as 20% on everyone else — the biggest trade shock since the Smoot-Hawley Act that deepened the Great Depression of the 1930s.
“An escalation of trade barriers between blocs would lead to severe efficiency and welfare losses for all,” said Panetta. “It would reduce the diversification of our economies and increase the volatility of output and inflation.”
The Italian official also highlighted that “protectionism would not be as protective as it might seem, as blunt policies would inevitably be circumvented.”
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