Christine Lagarde, managing director of the International Monetary Fund is of the view that business regulations need to be cut, immigration policies need to be overhauled, investment need to be made in infrastructure programs and tax system needs to be reformed in the United States.
President Donald Trump was elected on pushing U.S.-first policies rather than the global approach advocated by the IMF and Lagarde’s list seems to align with the priorities of Trump. However, Lagarde said: “I’m not a fan of anybody. And I’m not a fan of any particular initial proposals. We want to see the details”, when asked if she’s a fan of Trump.
She said that when it releases its latest forecasts next week, the IMF plans to upgrade its outlook for global economic growth. The strength is coming from about 75 percent of the economies around the world, said Lagarde in an interview to a television channel. “In other words, it’s not one country that’s leading the charge. It’s not only the emerging market economies that used to be the case. It’s Europe. It’s the United States. It’s Japan. And it’s China of course and India, plus a few other countries.”
Global growth would hit 3.6 percent in 2018, which would be the fastest clip since 2011, the IMF predicted in July.
Saying debt of all kinds — both public and private — has gone up since the 2008 financial crisis, Lagarde did cite growing “debt around the world” as a concern.
Tax reform is one of the areas that would help boost U.S. growth, Lagarde said.
“We have said regularly, and very strongly in the last review of the U.S. economy, that tax reform is a must. Tax reform in the U.S. is an imperative,” she said. “It has to be simpler. It has to be a lower corporate rate. It has to eliminate all the exemptions … that make the system so complicated. It has to be focused on improving the situation of the middle class. It has to be conducive to more labor.”
Blueprint for cutting personal and corporate tax rates and simplifying the U.S. tax code was unveiled by the Republicans last week.
Lagarde said: “It should be budget neutral. It should not increase the deficit. It should not drive to more debt in the future.”
Their tax plan would boost economic growth and therefore pay for itself, the White House and GOP leaders on Capitol Hill said, despite skepticism from critics.
“Ideally it would be good,” Lagarde said, but she argued that “it’s impossible to model the outcome” without more details. “It’s too embryonic at the moment. And it’s not gone through the legislative process … which will add complexity, will be subject to lobbying forces,” she added.
(Adapted from CNBC)v