IMF Chief Executive Officer David Lipton said on Monday that: “US-China trade war represents the greatest risk to global stability and fiscal stabilization is needed to respond to economic shocks in Europe.”
During a conference in Lisbon, Lipton said: “Of course, this is not just about Europe, the United States should also get its fiscal home okay.” US-China trade tensions pose the greatest risk to global stability. ”
About eight months ago, the trade dispute between the two countries began, affecting the full flow of $ 2 billion of freight between the world’s largest and second largest economies.
Lipton said he believed fiscal stability capacity should be at the center of risk reduction in Europe, describing it as crucial to “respond to macroeconomic shocks and improve the combination of fiscal and monetary policy.”
Lipton added: “In its absence, the euro area will remain overburdened by monetary policy for stabilization and many of the burden of crisis response will fall to individual countries with their ability to react depending on fiscal space of each country “.
Regarding Europe’s recent economic downturn, Lipton said that every EU member state should “strengthen their protection ahead of a possible downturn,” including those countries that have not addressed “sacred weaknesses,” especially Italy.
“A serious recession can be very damaging to these countries because they will be poorly prepared, their weaknesses can pose a serious obstacle to Europe’s goal of convergence of living standards, productivity, national welfare” , he said./Investing.com