IMF urges world economy to prepare for shift in US policy

IMF chief economist Maurice Obstfeld in an IMF blog posted on Tuesday has asked global economy to prepare for a major shift in US policy. 

Obstfeld warns about rising protectionism and exchange rate fluctuations. He says, “Although it’s still early to know how the US fiscal policy will change, one thing seems clear that it will turn more expansionary through some combination of more spending and lower tax rates”. 

He adds, further, that emerging markets/Asian economies with strong dollar-denominated debt could see worsened balance sheets due to the rising US dollar interest rates and domestic currency depreciation.