Trump a Concern for Global Economy

The head of the International Monetary Fund, Christine Lagarde, has said that one of the biggest risks to the global economy in 2017 was “a race to the bottom” on taxes, regulations and trade, in an indirect reference to the policy plans of the incoming US administration.

Lagarde made the comments at a press conference at the World Economic Forum in Davos, which was looking at the global economic outlook, TVC News reported.

She said that protectionist policies from the new US administration of President Donald Trump will probably have a negative impact on the economy, overshadowing any positive gains from economic stimulus measures.

Of his expectations for the early days of the Trump presidency, Blackrock CEO, Laurence D. Fink, said: “In our conversations with the proposed economic teams, they want to be loud, noisy and strong in the first 100 days. I think that will continue to create some optimism. On the other hand, we still have quite a bit of uncertainty about how we are going to pay for this.”

Also at the conference was UK chancellor of the exchequer, Philip Hammond, who warned the European Union that Britain would find other ways to remain competitive after Brexit if it did not strike a comprehensive trading deal with the bloc.

But Hammond stressed that was not what the UK government ideally wanted.

“My strong preference and my prime minister’s strong preference, is that we maintain our competitiveness by remaining within the European economic mainstream, with access to the European markets,” Hammond said.

The governor of the Bank of Japan, Haruhiko Kuroda, gave his forecast for Japan’s economy. He said it is likely to head toward a sustainable growth path as global trade and manufacturing activity pick up. “The top priority for macro-economic policy, is to continue to overcome inflation,” he said.

Kuroda’s optimistic comments on recovery prospects suggest the BoJ will maintain its upbeat economic and price forecasts when its nine-member board conducts a quarterly review of projections on Jan. 30-31.

The growth projections Kuroda offered are higher than the BoJ board’s median forecasts of 1% expansion this fiscal year and 1.3% the following year.

It is rare for a BoJ governor to offer specific growth projections that vary from the BoJ board’s median forecasts ahead of the quarterly forecast review.