tv IMF Managing Director at Wall Street Journal CEO Council Meeting CSPAN December 24, 2019 6:45pm-7:05pm EST
not. that is the single biggest problem that faces us today. we must restore growth and prosperity, and then look those animal spirits a best we can. we will devote our g7 efforts towards that. i don't see that so much as a central bank function, i see it more as going back to old-fashioned supply and scented policies where we should reward success and not punish it. >> so good news on inflation unless you're trying to raise your prices. [laughter] my code well thank you very much. [applause] next, the managing director of the international monetary fund speaks at the annual wall street journal ceo council meeting in washington d.c. >> soleri gave us a very good primer on the u.s. economy and began talking about the international economy let's take that a step further and
ask krista lena to join us. she is the new managing director the new chief of the imf. let's see what her prognosis is for the market outside of the united states. [applause] thank you for having us some so happy to be here so let's get right into it. we just heard a very upbeat view of the u.s. economy and complaints about the global economy. let's start with the u.s. despite everything mr. cutler just said, we've also seen a slowdown in u.s. growth this year in a slump in manufacturing and decline in business perspective. from your perch what is your outlook for the u.s. economy in the coming year? >> while the u.s. is in a good place. and people in this room have contributed to that. what we have is the longest in
the history of expansion, lowest in the last 50 years unemployment, what we value particularly is to see that wages are going up in the u.s. and wages of low-paid workers are outpacing wage growth on average. that is driven by gains, that's very important to recognize. but, many manufacturing and agriculture are more on self footing than the rest of the economy. what we see, consumption and services as the drivers for that. we see in the united states, like everywhere, prolonged
periods of low interest rates leading to what? more leverage. and that is in the household, corporate's,. >> do you see that as a vulnerability? >> we see this as something to be mindful of. because we cannot make a prediction that they would be never a financial stress. what we see is firms going more often then not to nonfinancial institutions. that means higher risk. so we have to want to. this is a liability. we also see in the united states room to do more for the poorest americans. i was listening outside to larry talking about the next generation of policy measures if this administration is to continue. it would be good to target where they could be a boost to
further in the economy. i would say last but not least, trades, the u.s. economy can do better if there is less uncertainty in trade. and just to give you the number, weaving institution that loves to wrestle with numbers. we assess that trade sanctions are costing the world economy's $700 billion by next year. more important to them the number, more important than the number is the breakdown. only one third of this number comes from. [inaudible] sixty-three comes from uncertainty percent and 4% comes from a loss. in our expectation is that unless they are handled, and lessees are handled, we will
see global value change and more impact on probability person dealing with uncertainty would be really great for growth in the united states and elsewhere. >> just to wrap up the u.s. though, are you seeing in a 20 year, 2020 continued slowdown in the u.s. economy or stabilize? >> our prediction is .1% of next year it is 2.4 for this year. so based on today's assessment, we see a little bit of slowdown. next year not by much. we still see very vibrant consumer demands it driven by what we just described. and services has been doing quite well. so how would manufacturing be affected next year if we had less trades and uncertainty. we would expect a good number there. >> self a pullback and ask the same question globally, and ims in october lowered its
forecast for global growth to i think 3% this year. what are you seeing in 2020 question manager see a rebound you see a continued slide? >> so for next year we are projecting 3.4% that is a rebound. but we are saying that's not quite significant with the outside risk. >> orders the rebound come from? speed back it would be economies particularly slow this year. being at least that slow next year or rebounding with countries like argentina, turkey, turkey is doing a little better. we also are recognizing they are a number of bright spots in the world. i really hope people here would pay attention to those. we had 40 countries that are growing 5% or more. see max so let's start there. where the bright spots? >> i would start from.
[inaudible] among them indonesia would be up 5% or more. they contribute to global growth 10%. this is about as much of the result that the u.s. contributes to global growth. we are a little, there are number of countries in africa that people are not paying much attention too, but they are ripe for good investments. where growth is seven, eight, 9%. they have done really well to reform their business environments. i just came from senegal and i would put this country in that mix. senegal, kenya, everybody knows about them. we do see two vulnerabilities in the world that we had not seen actually in our october forecast. one is india slowing down a
little more than we anticipated. and to unrest. it's very clearly people on the streets need the economies slows down. they are thinking of this in hong kong, and chile, and in hong kong, and lebanon. and whether this unrest momentum would be sustained is also a downside risk to that forecast. >> let's go to the dragon in the room, china, the second-largest economy. what are you expecting to see there? as you know a lot of the global slow down to china's slowdown. china alone has had a big broom it's double digit growth years contribute a lot to the global economy. do you see it stabilizing or something more? >> you are absolutely correct. china contributing one third of global growth slowing down, that affects immediately the numbers. this year we expect them to grow at 6.1%. this is still within their
forecast and projection was 66.5. but on the lower end of the forecast period for next year, for the first time with projects china to grow over 6% to 8%. and it is partially because of the metro process of shifting from high-speed to high-quality growth. shifting for more exports and growth to more domestic consumption this causes growth. and this is partially due to trade. so if you look at the numbers the effects on trade affects the world economy, china has more of that impact. just because it is more expert oriented and in the economy of china when there is anything on the horizon, that is not good news for the numbers. but china does have space to boost its economy.
what they are recommending aaron will actually what they're looking into is a moderate action on the modern policy side. stimulus that this time is not going to be infrastructure projects. this is what china used to do. they had infrastructure spending. now they are more oriented to tax cuts is a measure of stimulate. so it's a little bit how they would say about the u.s. in china certainly has a lot of space to move their service sector by opening up the financial sector. just a child i was in china about a week ago, all the conversations from presidency down to heads of regulators, were about china being opening financial services. they're very interested in the support 2d regulatory agencies that are critical in that area. >> but china also has a debt issue and we have reported
that the leaders are somewhat reluctant to engage in stimulus because they don't want to feed more debt. they want to curb the growth of debt. >> that's all they want to make tax cuts instead of direct investments. they are leveraged like in many and the slow rate environment. they are recognizing that one specific area they need to concentrate on are the small banks that are more vulnerable. they are taking actions in that direction. they also recognize that they have to be estate reform. what is happening now is because of uncertainty which is allowed the new normal. they are a bit more reluctance than they were let's say a year ago, to a more aggressive form. they would say what would happen if we had workers losing their jobs too rapidly. >> you mentioned india, i wanted to ask you do you think
we will ever see india sort of taking on the role of china has played in recent years? others around the world look for india to be the next big economy that could possibly go into double-digit growth for some period of time. >> and they are right about doing that. because they are one of the bright spots i talked about. future have that large economy but not many. but to answer your question, yes, india has that potential. south asia over all, budging india these are average age of the population of 27 years. just think of the aging population of the advanced economy and how that is attractive growth. they are mindful that they have to be much more serious around zero well implemented reforms. and they are at the moment
looking into a measures to invest the confidence. will they be the next china? double digit growth rate? >> there's a lot of hope in this room. >> i think all we can do is put a very strong prayer and provide them with the best support to make these prayers come true. >> i know we want to go to questions, right must you. >> questions from the audience. >> he touched on africa, and the two things that we have seen in africa that is really limited. one is corruption and the second is political volatility. i think there's 55 or 57 molecules of the different directions. and everybody was to potentially you'd mentioned young people the birthrate, et cetera. it has the potential. but it doesn't seem to work.
>> the.you just made is finally sinking into the minds of a good number of leaders. i am encouraged by what i hear in kenya, and senegal a recognition that unless they are serious about uprooting corruption, never mind what else they do, they would have a hard time to attract investors. we also have to recognize that it takes two to tango. if they make efforts to improve investment environment, and yet nothing happens, we may be disempowering the more progressive leadership and africa. so what we are determined to do at the front, is to work harder on providing objectives the big picture of the investment conditions and countries in africa. and differentiate between those that are doing well because you make a very, very
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