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Incoming European Central Bank President Christine Lagarde said President Donald Trump’s trade war with China has dented global economic growth, and he could lift that burden.
“I think the biggest key that President Trump has is in relation to predictability and, and certainty of the terms of trade. It’s the unknown which is hurting,” Lagarde told CBS News’s “60 Minutes” program, according to a transcript of her remarks provided in advance by the network.
The interview with Lagarde was conducted in September.
“You can’t adjust to the unknown. So what do you do? You build buffers. You build savings. You wonder what comes next. That’s not propitious to economic development,” said Lagarde, who takes the ECB’s helm on Nov. 1, replacing Mario Draghi.
Asked whether the trade war could tip the global economy in the wrong direction, Lagarde said, “it’s certainly going to give a big haircut to the global economy.”
“If you shave off, you know, almost a percentage point of growth that means less investment, less jobs, more unemployment, reduced growth. So of course it has an impact,” she said.
The International Monetary Fund, which Lagarde led for eight years, cut its 2019 global growth forecast last week. citing a broad deceleration across the world’s largest economies amid trade tensions. The IMF now expects the world economy to grow 3% this year, down from 3.2% seen in July, with the 2020 estimate lowered to 3.4% from 3.5%.
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