International Monetary Fund Managing Director Christine Lagarde said on Monday she expects the United States and China to reach a deal to end their trade dispute, which has unnerved financial markets and cast a shadow over the global economy.
“I would say ‘Yes,’” Lagarde said at the Milken Institute Global Conference when asked whether talks between the world’s two largest economies would end in a deal.
Washington and Beijing have been engaged for the past year in a trade war marked by tariffs on billions of dollars in goods and threats of escalation. The talks are now at a critical point.
US Treasury Secretary Steven Mnuchin was scheduled to speak at the conference on Monday but was headed to China instead for talks.
Lagarde was the first speaker at the annual conference, which draws 4,000 attendees including some of the world’s most powerful thinkers and trendsetters to discuss finance, healthcare and other topics.
Later on Monday, Blackstone Group LP Chief Executive Stephen Schwarzman also said he was positive about the prospects for a US-China deal, but cautioned it would not solve all the issues being disputed.
“I’m positive that they will come up with something that works, but it will not be a trade deal that solves all problems for all people and moves China into the modern world,” he said.
“There’s a process of normalization that will take some period of time.”
Lagarde said in an interview she did not see the US economy dipping into a recession, following last week’s news that it grew at a stronger-than-expected 3.2 per cent annualised pace in the first three months of 2019.
Concerns have been mounting over a global slowdown, particularly in China and Europe, and the prospect that the decade-long US bull market might be coming to an end, according to Reuters news agency.
But the strong US GDP growth data may prompt leaders to reassess the health of the economy, she said. Lagarde cautioned, however, that more data was necessary before making a more definite call.
Even as inflation has been largely in check, a situation she called “highly mysterious,” Lagarde said she expected price pressures to pick up “gradually and slowly” in the coming months, in part fueled by rising oil prices.
Asked if she would like to continue as IMF managing director after her current term ends in 2021, Lagarde said: “I’m looking at my options.” The former French politician was named IMF chief in 2011.
