Trump, Brexit caus­ing un­cer­tainty: ECB chief

The Myanmar Times - - Business -

GEOPO­LIT­I­CAL events in­clud­ing the elec­tion of Don­ald Trump and Bri­tain’s Brexit vote are the main rea­sons for the cur­rent eco­nomic un­cer­tainty, Euro­pean Cen­tral Bank chief Mario Draghi told Euro­pean Union par­lia­men­tar­i­ans.

“Look­ing at re­cent events, it is clear that geopo­lit­i­cal un­cer­tainty has be­come the ma­jor source of un­cer­tainty for the months to come,” Mr Draghi said to the par­lia­ment’s eco­nomic com­mit­tee.

The ECB pres­i­dent high­lighted in par­tic­u­lar the de­ci­sion by Bri­tish vot­ers to leave the EU and the risks which the ref­er­en­dum re­sult poses for Euro­pean economies.

Mr Draghi ad­mit­ted it was dif­fi­cult to pre­dict the pre­cise eco­nomic im­pli­ca­tions of Brexit, as th­ese will “no­tably de­pend on the tim­ing, progress and fi­nal out­come of the up­com­ing ne­go­ti­a­tions”.

It is there­fore im­por­tant “to have clar­ity on the ne­go­ti­a­tion process as soon as pos­si­ble in or­der to re­duce un­cer­tainty”, he added.

The ar­rival of US Pres­i­dent-elect Don­ald Trump, a pro­po­nent of pro­tec­tion­ism, also raises nu­mer­ous ques­tions on fu­ture pol­icy of the world’s big­gest econ­omy.

After a strong ini­tial re­ac­tion by fi­nan­cial mar­kets, which fell in the face of both events, the sub­se­quent re­cov­ery “leads us to the con­clu­sion that mar­kets have been more re­silient than one would have ex­pected a few years ago”, said Mr Draghi.

How­ever, th­ese changes “are quite pro­found and are go­ing to af­fect the re­al­ity of com­ing years”, the ECB chief added. –

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