A strengthening dollar and a "race to the bottom" on taxes, deregulation and trade policy are the major risks to an otherwise brightening global economy, financial leaders said on the final day of the World Economic Forum in Davos.
Asked about "black swans," or unexpected, disruptive events, that could derail the outlook in 2017, International Monetary Fund (IMF) chief Christine Lagarde touched on risks stemming from the policy promises of incoming U.S. president Donald Trump.
"If the disruptions we are expecting for 2017 as a result of what has happened in 2016 prove to be all negative and we are to end up in a race to the bottom on the tax front, on the trade front, on the financial regulation front, then that for me would be a really big 'black swan' that would have devastating effects," she said.
Business leaders and policymakers rounding off four days of discussions in Davos applauded the anticipated economic stimulus from a new Trump administration determined to ramp up infrastructure investments reduce taxes.
But there are plenty of worries and uncertainties.
The head of BlackRock, the world's largest money manager, said that while such measures should support U.S. markets for at least the first 100 days of the new presidency, it was unclear how they would be paid for.
Larry Fink also warned of looming dangers from a stronger dollar as the Federal Reserve hikes interest rates, putting the White House on a potential collision course with the central bank.
Fed tightening this year could push up the value of the U.S. currency "significantly," he said. "We all should be aware right now that we are going to be living in a world of a strong dollar."
Last month, the U.S. Federal Reserve hiked interest rates for just the second time in a decade, a sign that the lengthy period of ultra-loose monetary policy that followed the global financial crisis is coming to an end.
The dollar is already hovering near 14-year highs against the euro, posing a threat to U.S. competitiveness at a time when Trump is trying to bring back more investment and jobs.