U.S. President Donald Trump and top economic policymakers were singing the same tune on the economy by the end of the World Economic Forum in Davos: The global economic picture is looking rosy.
Economic prospects have improved noticeably in the past three months, partly because of a phase-one trade agreement between the U.S. and China, Kristalina Georgieva, the managing director of the International Monetary Fund, and European Central Bank President Christine Lagarde said Friday in Davos, Switzerland. Central banks also have cut interest rates while industrial production around the world started to bottom out, according to remarks published by The New York Times.
Trump touted his economic and trade policies and his administration’s elimination of taxes and regulations as providing economic stimulus in appearances Tuesday and Wednesday in Davos. He warned against the “perennial prophets of doom” on climate change, ignoring the conference’s focus on climate risk.
While Georgieva and Lagarde sounded positive notes Friday on a panel with policymakers from Germany, Japan and China, the IMF earlier this week took a gloomier tone. On Monday, in an official forecast, the agency revised down its growth predictions for the global economy for 2019 and 2020, saying the outlook “remains sluggish.” Georgieva echoed that language Friday in Davos, when she said that the forecast of 3.3% growth this year is “not fantastic growth, it is sluggish.”
Leaders of the U.S. and Europe still managed to square off about the environment in a panel that was otherwise about the economy. U.S. Treasury Secretary Steven Mnuchin took issue with comments by Lagarde that central banks need to lead when it comes to modeling climate risk and its mitigation. She proposed that companies stop thinking about short-term returns and plan 30 years out.
“If we can push companies into the direction of actually anticipating the transition, pricing it, and making sure that they move to cleaner and cleaner energy uses, then it helps,” Lagarde said.
Mnuchin responded that “there is no way we can possibly model what these risks are over the next 30 years with a level of certainty, given what I think is the changes in technology along the way” and added that “I don’t think we know how to price these things.”
Also at Davos on Friday:
- The European Union, and 16 countries including China and Brazil, have banded together in an alliance to settle trade disputes via an appeals and arbitration system at the World Trade Organization, Bloomberg reported. The Trump administration paralyzed a WTO appellate body last year by blocking all nominees to the panel.
- Haruhiko Kuroda, the governor of the Bank of Japan, said that the central bank “will continue accommodative monetary policy for some time.”