Ignazio Visco: Statement - meeting of the Development Committee

Statement by Mr Ignazio Visco, Governor of the Bank of Italy and Governor of the Constituency of Albania, Greece, Italy, Malta, Portugal, San Marino and Timor-Leste, at the 100th Meeting of the Development Committee (Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries), Washington DC, 19 October 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

The global business cycle remains very weak. Geopolitical tensions, combined with the sharp decline in international trade recorded in the last few quarters, weigh on firms' confidence and on investment. Employment and wage growth continue to support incomes, mainly thanks to the resilience of services, but manufacturing is particularly sluggish. If the latter proves to be persistent, it will inevitably reverberate across the other sectors of the economy.

The main risk to the global outlook once again derives from commercial tensions. Besides the already visible effects of the escalation of tariffs, quantitative restrictions can also have a significant global impact, particularly if accompanied by dislocation of value chains. The introduction of export restrictions in some countries may lead to trade diversion or import substitution, with efficiency losses.