IMF chief sees growth, overheating, debt risks from U.S. tax cuts

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YOGYAKARTA, Indonesia (Reuters) – International Monetary Fund Managing Director Christine Lagarde said on Thursday she sees positive and negative effects from a “complicated” U.S. tax overhaul, including a near-term growth bump that risks overheating the U.S. economy and a problematic rise in debt.

Lagarde told Reuters in an interview on Thursday that tax cuts can lift the U.S. growth rate by about 1.2 percentage points annually, and that should will help boost global growth and trade for at least a few years.

“To the extent that growth is higher in the U.S. and because the U.S. is a very open economy, it will probably increase the demand from the U.S. to the other economies around the world, and that’s also a positive,” Lagarde said during a week-long trip to Indonesia.

Reporting by David Lawder; Editing by Richard Borsuk



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