Mohamed Aly Ely-Erian, Chief Economic Advisor for Allianz Se.
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President Donald Trumpextended raft of Import rates Set the American economy in danger of recession, warned the economic adviser of Allianz, the economic advisor of Allianz on Friday, on Friday.
He added that the Trump band of so-called reciprocal rates could have a significant effect on the world economy.
“You have had a main rethink of growth prospects, with a recession in the United States of up to 50%, you have seen an increase in inflation expectations, up to 3.5%,” he told Silvia Amaro de CNBC on the sidelines of the Ambrosetti forum in Cernobbio, Italy.
“I do not think that (an American recession) is inevitable because the structure of the economy is so strong, but the risk has become uncomfortably high.”
Trump's prices are deployed just like Signs of weakness begin to show up in the American economy. Last monthFund managers, strategists and analysts told CNBC that they had seen a slowdown on the horizon, with the risk of recession reaching a six -month summit.
El-Erian said he thought that the American economy would extend between 1% and 1.5% this year, noting that this represented a “significant change in growth prospects” compared to the The projection of the IMF of 2.7% American growth done earlier this year.
“If we get almost 1%, we get closer to what is known as” dropout speed “,” he said. “The economy does not go fast enough to allow the type of resource reallocations you need. So, once you get closer to one, which I hope that we will not, the risk of recession will increase considerably. “
In addition to warning the state of the US economy when the prices come into play, El-Erian also said that the markets underestimated the impact of inflation of Aggressive trade policies of Trump.
He also warned that the markets underestimated the impact of the inflation of the prices regime.
“The first reaction was concerns about growth. We have not yet had two other reactions: what will happen to growth in other countries, and that makes a question mark on the question of whether the weakness of the dollar will continue, then what does the (federal reserve) do?” questioned.
Last week, the latest American data showed that central inflation increased more than expected, with the basic personal consumption expenditure index – the FED key inflation gauge – marking its bigger monthly gain in more than a year.
“I think that if we are lucky, we will get a drop in rate, not four, and that would not surprise me if we don't get it,” added El-Erian.
“If it is a normal diet – and I say this qualification with a lot of accent, because it has not been a normal diet – we will probably not get a drop in rate.”
The markets are currently prices in four Fed rate drops during the year, according to The CME group Fedwatch tracker. During its last meeting in March, the central bank Has maintained its stable key rate in a beach between 4.25% and 4.5%Officials reducing their American growth forecasts, but saying that they have still seen two rate drops until 2025.
“If the United States slows down, the rest of the world will slow down more”
In the aftermath of the announcement of Trump's reciprocal prices, European currencies recorded significant gains against the US dollar, the euro and the British pound Press six -month summits against the greenback.
El-Erian nevertheless said that he did not expect to see a long-term weakness in dollars.
“The market reacted to reduce American growth, reduce interest rates, reduce capital flows in the United States, and that is why we have seen the dollar index depreciate. I think it is the first,” he said. “People will realize that if the United States slows down, the rest of the world will slow down more than the United States, so I don't think we will continue to see the weakness of the dollar.”
In the end, El-Erian said, economists were divided on what the enormous import rights mean for American and global economies.
“Although there is, I think, a complete consensus on pain (caused by short-term prices), there is a disagreement on long-term gain,” he told CNBC. “Can you argue that it is a pain now to win later? Yes. Can you do it with conviction? No.”
– Jeff Cox of CNBC and Steve Liesman contributed to this report.
