As Trump is planned stimulus to pump money to upgrade bridges, roads and other parts of the nation’s infrastructure, and cutting corporate and personal taxes, the IMF is saying the President Trump could be good for U.S. economy.
Christine Lagarde, head of the International Monetary Fund said Sunday that President Donald Trump will probably be good for the American economy in the short term. She did say rising interest rates and a strengthening dollar will be tough for global trade.
Ms. Lagarde cited Trump’s plans for investment in U.S. infrastructure and his likely tax reforms could do well for America’s economic fortunes. Donald Trump’s policies might be felt in the rest of the world.
“That’s a tightening that is going to be difficult on the global economy and for which economies have to prepare,” Lagarde said during an event at the World Government Summit in Dubai as reported by USA Today.
Lagarde discussed a creeping and “insidious” anti-globalization movement which has led to a rise in protectionist views. “We have been saying globalization is great, international trade is great — and it is,” she said. “But we have not looked at those who were badly, negatively impacted.” Instead of citing derivatives and bad loans, she cited robots and shrinking incomes of the global middle class.
Regarding Trump in the White House, Lagarde tread lightly, saying “this is really a work in progress — there’s been of announcements, a lot of tweets, a lot of things being said.” She pointed towards the importance of data and facts in decision making.
“I know it’s not fashionable at the moment, but I think that facts, figures (and) actual assessment of the reality matter and that we have to be honest about it,” she said.
Her comments mirror IMF statements in January, when the said that a stimulus in spending under Trump should bode well for the U.S. economy.
The IMF’s recent optimism towards the U.S economy comes as the world awaits how the Trump administration will approach global governance.
The IMF’s most recent growth forecast for 2017 is 2.3%, an incremental increase from its 2.2% made in October. Next
Trump has claimed his economic policies would mean a 4% pace.
The IMF called its forecast for the U.S. the most probable of a “wide range of possible scenarios,” citing uncertainty over Trump and a Republican controlled congress will spell.
If Donald Trump pursues stimulus measures above the IMF forecast, U.S growth could prove even stronger. Donald Trump protectionism could stifle the growth.
The IMF’s tune was different during the Presidential election, when they sugested that Trump’s protectionism wold be bad for world economy.
“For two decades before the 2000s, global trade regularly grew by 7%, or twice the rate of the world economy. Today, however, trade growth is below that of the global economy – at about 2%,” Lagarde said.
“There is a growing risk of politicians seeking office by promising to ‘get tough’ with foreign trade partners through punitive tariffs or other restrictions on trade. I am deeply concerned about this – not only because I was a minister of trade, but because trade has been at the heart of the IMF’s mandate for more than 70 years.”