The annual meeting of the International Monetary Fund (IMF) in Washington, in the United States, is focusing on the economic repercussions of Donald Trump’s government policies, according to the assessment of off Christopher GarmanExecutive Director of the Content Group partner at the Eurasia Group in WW newspaper, CNN Brazil.
The main topic under discussion is the effect of the “tariff” announced on April 2 and the possible future procedures for the US administration. Jarman refers to a positive direction: “Trump is afraid of the economic damage caused by his government,” which is, which It reflects signs of decline in prices on Chinese products.
US Treasury Secretary Scott Payette sought to calm financial markets, indicating progress in commercial negotiations. In addition, Trump indicated that he does not intend to shoot at the Federal Reserve Chairman (Fed)Jerome Powell.
Economic slowdown and geopolitical conflicts
Despite these signs, Garman indicates that economic damage has already happened. And he warns that “the rates are still very high and the possibility of the United States entering stagnation is great.” “The discussion is now about the severity of this slowdown in the American and global economy.”
For the director of Eurasia, a deeper topic under discussion is whether the world is entering into a cycle of larger geopolitical conflicts, especially between the United States and China.
“This is a vision that we should share in the Eurasia group that the world moves to a cycle of higher geopolitical conflicts, lower growth and higher interest rates.”
The effects of Brazil
For Brazil, this scenario may not necessarily be negative in the short term. Garman explains that “the real remains at the stable level because the dollar weakens.” In addition, the country can face a “global deviation shock with fewer prices of basic commodities and cheaper products from Asia.”
This context can be favorable for LULA, bearing in mind that inflation is a political sensitive point. However, Garman warns that Brazil’s relationship with China can become a “thorny point” in relations with the United States, as Washington should pressure his business partners to reduce economic relations with Beijing.
