Submitted by Taps Coogan on the 22nd of June 2018 to The Sounding Line.
Allianz chief economic advisor Mohamed El-Erian recently spoke with Fox Business News to discuss the ongoing trade disputes between the US and China and to discuss the outlook for the global economy.
“In the end I still suspect that all of these trade tensions will result in fairer-but-still-free trade, but the uncertainty is higher… The US, in a way, outperforms in whatever scenario we end up. The question is ‘what does the global economy as a whole look like?’ So the house is solid. The neighborhood is uncertain. Why does the US outperform? Well if we get fairer and free trade, this will help US growth. If we slip into a trade war, the US is a relatively closed economy and therefore the US will get hurt less than others. So the markets are being very rational in saying ‘the US outperforms in either scenario’ but the overall level of asset prices is very different…”
“The US, and other countries, have genuine issues. Intellectual property theft, that’s a genuine issue. Non-trade tariffs like join venture requirements, that’s a genuine issue… and… the US has a stronger bargaining position.”
“Away from the US things are slowing down. That’s because their growth hasn’t been policy induced. It’s either been a natural healing process in Europe… or alternatively it’s been a bounce back from a shock. In the US it’s been policy driven and what we are seeing is three engines of growth coming on at the same time: the consumer because the labor market is strong, business investment, and thirdly government spending and all three are coming together. So, I think actually what you are going to see in an acceleration in growth on an annual basis for a while and then the question mark will be how long can the US be the good house in a challenged global neighborhood.”
There is more, so enjoy the full interview above.
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