International Monetary Fund predicts Trump may boost US economy

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Donald Trump
US President Donald Trump gives a thumbs up as he departs the White House in Washington to spend the weekend in Florida. Reuters/Kevin Lamarque

The head of International Monetary Fund (IMF) says the administration of Donald Trump will likely boost the economy of America. Christine Lagarde said the president taking office might be beneficial for the American economy in the short term.

Lagarde has cited Trump’s visions for more investments in US infrastructure and proposed tax reforms as reasons why his administration might be good for US economy. On taxes, Trump has earlier proposed to simplify the tax code and take poor earners out of tax altogether.

But Lagarde has also recognised that his policies might squeeze international markets. During the World Government Summit on Sunday in Dubai, Lagarde said the policies of the president may be difficult on the global economy. “That's a tightening that is going to be difficult on the global economy and for which economies have to prepare,” she said.

Meanwhile, she has described the United Kingdom's vote to leave the European Union as an “insidious” push towards anti-globalisation. Lagarde recognises that globalisation and international trade are beneficial but they also have some negative impacts. These include the rise of robots taking over human jobs and the flinching gains of the middle class.  Trump's proposals would cut income taxes for the majority of middle-class Americans but it would not be sufficient to offset those changes. “If you're a low- or moderate-income single parent, you're going to get hurt,” said Bob Williams, a fellow at the Tax Policy Center.

Report released by market research company Forrester indicated that robots will take 6 percent of all jobs in the United States by 2021. “By 2021 a disruptive tidal wave will begin. Solutions powered by AI/cognitive technology will displace jobs, with the biggest impact felt in transportation, logistics, customer service and consumer services,” said Forrester’s Brian Hopkins in a report shared by the Guardian.

The president’s economic manifesto has been slammed by analysts even before he took office. Global firm Oxford Economics has forecasted that the US economy might drop by the end of a single-term Trump presidency. The firm has pointed Trump’s proposed tax cuts as reason why the country’s economy might fall.

Aside from cutting taxes, Trump also promised to get rid of regulation and unleash American energy by putting Americans back to work during the 2016 presidential campaign. “This is what our new future will look like,” he said.

Mark Hamrick has reported on economic news that former US President Barack Obama has passed the job to Trump with a strong economy.  “I think Barack Obama can be relatively pleased about the job that he and his administration have done,” Hamrick said.