Thursday, March 23, 2017

Roubini : The Markets are Underestimating The Risk of Trump's Protectionist Policies

"[Markets] are overestimating the positives of the US-Trump policies. Infrastructure, stimulus, deregulation, tax cuts: I think Trump will achieve much less on those dimensions," he told CNBC.

"And they're underestimating the risk US protectionist policies are going to lead to trade wars, that the restrictions on immigration are going to slow down labor supply, and that micromanaging the corporate sector is going to be negative," added the economist.

Roubini agreed that market confidence is rising, but warned of Trump stimulus wearing off in the long-term.

"Over the next six to 12 months, maybe the positives are going to dominate because you have animal spirits, a build-up in consumer and business confidence, you'll have some policy action. The economy is growing, and hopefully, those positives are going to stay for a while," he told CNBC.

"But the more there's going to trade friction, the more there will be restriction of migration, the more this stimulus is going to be excessive, forcing the Fed in a full-employment economy to tighten more and faster, the more some of these negatives start to affect markets and economic growth over time," Roubini added.

 Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

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