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

[March 01, 2018]    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.

International Monetary Fund Managing Director Christine Lagarde looks on during an IMF conference in Jakarta, Indonesia February 27, 2018. REUTERS/Beawiharta

Lagarde told Reuters in an interview on Thursday that tax cuts can lift the U.S. growth rate by about 1.2 percentage points over the three years through 2020, and that should 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)

[© 2018 Thomson Reuters. All rights reserved.]

Copyright 2018 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.