ADVERTISEMENT

Carmen Reinhart Says Global Economy Is Entering a ‘Sweet Spot’

Carmen Reinhart Says Global Economy Is Entering a ‘Sweet Spot’

(Bloomberg) -- Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.

The global economy is in a “sweet spot” amid steady growth, relatively subdued inflation and renewed optimism from the U.S.-China trade deal, according to Carmen Reinhart.

The Harvard University economist -- known for her dire warnings of market crises from Argentina to Venezuela and Turkey -- struck an upbeat tone on Wednesday in a Bloomberg TV interview from the World Economic Forum in Davos. One reason: Investor euphoria after the world’s two largest economies signed what they billed as the first phase of a broader trade pact.

“We’re actually at a sweet spot,” Reinhart said. “Right now, the focus has been on renewed optimism regarding reduced uncertainty after the trade agreement.”

Carmen Reinhart Says Global Economy Is Entering a ‘Sweet Spot’

Her view has some supporters. While the International Monetary Fund trimmed its global growth outlook earlier this week, it said risks are “less skewed” toward negative outcomes.

Still, Reinhart said economic expansion won’t last forever. Reinhart said she disagrees with Bob Prince, the co-chief investment officer at Bridgewater Associates, who said earlier that the boom-bust cycle is over.

“We never leave the boom-bust cycle,” she said. “Maybe in five years we’ll not be talking about the sub-prime bubble, but the equity bubble.”

--With assistance from Tom Keene and Jonathan Ferro.

To contact the reporter on this story: Ben Bartenstein in New York at bbartenstei3@bloomberg.net

To contact the editors responsible for this story: Carolina Wilson at cwilson166@bloomberg.net, Alec D.B. McCabe

©2020 Bloomberg L.P.