US Treasury Steven Mnuchin talked to CNBC today and he mentioned President Donald Trump’s tweet regarding Russia and China currency devaluation. Mnuchin said that was a “warning shot at China and Russia about devaluation. China has devalued their currency in the past.” Mnuchin added that “they’ve used a lot of their reserves to actually support the currency. The president wants to make sure they don’t change their plans, and he’s watching it.”
Regarding the economy, Mnuchin said “we’re now at a point where we’re comfortably within our 3 percent or higher sustained economic growth”. He added that “we literally have met with hundreds of executives, small companies, big companies, and thousands of workers. We’re beginning to see the impact of the tax cuts, specifically people investing large amounts of money back into the United States.” Also, “the difference between 2.2 and 3 percent will pay for the tax cuts.”
Regarding rejoining TPP, Mnuchin just said that Trump would opt to join only when there are more favorable terms to the US. And Mnuchin is “cautiously optimistic.
Dollar is broadly higher today, entering into US session, after Mnuchin’s comments. Is it a coincidence? Or…?
IMF Obstfeld: Some governments pursue reforms, trade disputes divert others
In the new World Economic Outlook released today IMF kept global growth forecast unchanged at 3.9% in 2018 and 3.9% in 2019.
For advanced economies, growth projections for 2018 were generally revised up except Japan and Canada. For 2019, projections were largely unchanged with upward revision in US, France and Spain.
China’s growth projection was kept unchanged at 6.6% in 2018 and 6.4% in 2019.
Here is the summary table.
In a blog post by Maurice Obstfeld, Economic Counsellor and Director of Research at the IMF, it’s noted that “the world economy continues to show broad-based momentum. Against that positive backdrop, the prospect of a similarly broad-based conflict over trade presents a jarring picture.”
Obstfeld said that “prospect of trade restrictions and counter-restrictions threatens to undermine confidence and derail global growth prematurely.” And, without naming who, he added that “while some governments are pursuing substantial economic reforms, trade disputes risk diverting others from the constructive steps they would need to take now to improve and secure growth prospects.”
Referring to intensification of trade tensions since US announcement of steel and aluminum tariffs, Obstfeld said “these initiatives will do little, however, to change the multilateral or overall U.S. external current account deficit, which owes primarily to a level of aggregate U.S. spending that continues to exceed total income.”
The full blog post can be found here. Global Economy: Good News for Now but Trade Tensions a Threat