The head of the International Monetary Fund said on Sunday that US President Donald Trump taking office is likely good for the US economy in the short term, though rising interest rates and a strengthening dollar will challenge global trade.
Speaking at the World Government Summit in Dubai, Christine Lagarde said Trump’s plans for additional investment in US infrastructure and his likely tax reforms will boost the US’s economic fortunes.
“From the little we hear, we have reasons to be optimistic about economic growth in the United States,” said Lagarde.
“It is likely that there will be a 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.”
However, Lagarde acknowledged that Trump’s policies likely will squeeze international markets.
“That’s a tightening that is going to be difficult on the global economy and for which economies have to prepare,” Lagarde said.
She defended globalisation and international trade at a time of growing protectionism in the US and elsewhere in the world.
Lagarde also supported the Gulf countries’ decision to introduce VAT starting in 2018.
(AP)
