The global economy will be in danger if EU apply protectionist measures: ECB – Expansion MX

FRANKFURT (EFE). –

The vice-president of the European Central Bank (ECB), Vítor Constancio, warned that the world economy will be in danger if the U.s. applies protectionist policies, after the triumph of Donald Trump in the elections of the country.

at a conference In Frankfurt, Constancio estimated the negative economic impacts that may have such policies, announced during the campaign of the republican. The official said that Europe must rely on policies that boost domestic demand and support the growth, that is to say, fiscal stimulus and more reforms in competition policy.

“The global economy is facing again a degree of uncertainty is abnormal and the consequences may not be immediate,” he said.

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The vice-president of the ECB pointed out that the markets believe that fiscal stimulus “can break the liquidity trap that has hindered the growth in the advanced economies”.

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Constantius was concerned about inflation in the euro area, which is still far from the goal of the ECB, something under 2%, and argued that “we would like to see a turning point in the underlying inflation (which discounts the more volatile energy and food) because it would be a good indicator that the inflation benefits of internal factors”.

The ECB revaluará the situation of the region in December, said the official. It is believed that the institution could announce then, an extension of its monetary stimulus beyond march 2017.

The official forecast that “short-term growth is going to grow in the united States but it is not sure that this higher growth go beyond the rest of the world the way it did because of the risk of protectionism”.

The world trade, which is already quite weak, it can collapse, damaging all open economies that depend on exports, according to the vice-president of the ECB.

“protectionist Measures, particularly against large emerging economies may slow down further the global economic growth and create instability in currency markets”, he said.