IME’s Stanchev: If Trump’s policies remain as they are, a global recession is coming

A global recession is coming due to the policies of US President Donald Trump, if they remain as they are, Institute for Market Economics board chairman Krassen Stachev told Bulgarian National Radio on April 8, adding that this would be apparent at least after a quarter has passed.

Stanchev said that he does not know whether the recession will be as strong as it was during the Covid-19 pandemic, but it is possible that it will be like in 1932-1933, when it was about three per cent of GDP.

“This means a loss of economic potential of about $3 to 4 trillion, but what was happening in 1930 was a consequence of a similar policy, only under a different president,” Stanchev said.

He said that Trump’s policy is a complete misunderstanding of how the modern economy functions.

“The initial goal, announced a long time ago, is the re-industrialization of the US. First, the US is industrialized, second, it is a major provider of services to the world,” Stanchev said.

“Industrialization is not digging up land, mines and factories. It is also services. If we look at the US balance in trade in goods and services, we will see that it has an advantage in the whole world with services.”

With three trillion turnover between the EU and the US, the US has a positive balance in services and a slightly negative balance in goods.

The entire US deficit is $28 billion last year, which is less than the money the US government spends per day. Twenty-eight billion dollars is a trade deficit with the EU of an economy that is $30 trillion,” he said.

He said that US citizens will suffer more from Trump’s tariffs.

“Within a few months, the world will reduce tariffs and non-tariff restrictions on trade with each other, with the exception of the US, which means that money and capital will flee the United States,” Stanchev said.