Christine Lagarde, PHOTO:AFP
International Monetary Fund chief Christine Lagarde on Sunday voiced optimism for US economic growth under President Donald Trump but warned it could herald trouble for the rest of the world.
“From the little we know, and I will insist on the little we know, because this is really work in progress… but from the little we hear, we have reasons to be optimistic about economic growth in the United States,” Lagarde said at the annual World Government Summit in Dubai.
Lagarde predicted tax reform and more investment in infrastructure were both likely under Trump, whose Thursday teaser of fresh tax cut proposals pushed Wall Street stocks to new records.
The Dow, Nasdaq and S&P 500 all closed up 0.6 percent Thursday after the new US president promised a “phenomenal” tax cut plan would be unveiled within two or three weeks.
Yet the IMF chief did not mince words in raising concern over the global repercussions of a boon in the US economy.
“Now that’s the good news,” said Lagarde. “The more worrying news, if you will, is that it will have consequences on the rest of the world, and we are seeing it.”
She highlighted the strength of the dollar against other currencies, predicting a hike in interest rates regulated by the Federal Reserve. The IMF in January raised the US growth estimate a tenth of a point this year to 2.3 percent, and four-tenths of a point to 2.5 percent for 2018.
The World Bank meanwhile has not changed its forecasts for the United States, citing the uncertainty of Trump’s policy plans. Both the IMF and World Bank continue to point to uncertainty as a mitigating factor for economic projections in the United States.
The two organisations are expected to announce clearer forecasts at the World Economic Outlook in April.