There has been a qualified endorsement for US President Donald Trump from the head of the International Monetary Fund.
Speaking at the World Government Summit in Dubai, Christine Lagarde expressed concerns about his proposed rolling back of the regulation of US banks and she defended globalisation against the new president’s protectionist rhetoric.
But she admitted Trump’s policies are likely to be good for the US economy in the short term: “From the little we hear, we have reasons to be optimistic about economic growth in the United States. It is likely that there will be tax reform, it’s likely that there will be additional investment in infrastructure, and as a result of that it is very likely that growth will be up in the US.”
That was the good news Lagarde said, but there is a more worrying element, which is the repercussions for global trade from the inevitable rising US interest rates and strengthening of the dollar against other currencies: “So the currency higher, interest rates higher, that is a tightening that will be difficult on the global economy and for which economies have to prepare.”
Eurozone election worries
Asked about the eurozone, Lagarde said it is making progress in resolving its economic problems, but added she is worried about the result of this year’s elections in France, the Netherlands and Germany.
She did not elaborate on what her worries were.
Marine Le Pen, who has promised to take France out of the eurozone, is attracting support before presidential elections, while far-right politician Geert Wilders is riding high in Dutch opinion polls and Chancellor Angela Merkel’s conservatives face a tough challenge in German elections.
Asked whether governments’ continued wrangling over how to resolve the eurozone debt crisis showed the European Union was failing to deal with big issues, Lagarde defended the EU, saying Ireland, Portugal and Cyprus had all recovered from crises.
But she added, “More to be done. More to be done. No question about that.”
Euronews’ correspondent at the World Government Summit, Daleen Hassan, concluded: “This annual event is being held at a crucial time this. Dialogue and brainstorming among the decision-makers here makes this summit a global platform that might unify efforts to meet the political, economic and social challenges hanging over most of the world’s governments.”