Would Trump’s presidency impact European market?
When Americans were selecting their next president, they weren’t thinking about the impact it will have on the rest of the world. Since U.S.A. is one of the biggest economies in the world every change that occurs affects other countries. Americans spoke and chose the president that they think will be best for t their country. Unfortunately, what is good for U.S.A. doesn’t have to be good for European countries. Since Donald Trump announced changes in foreign and domestic policies we might expect some turbulence at the old continent. Experts are not optimistic, we listed few consequences that are most often mentioned by economists.
As the Guardian indicates:
“The US president-elect’s policies are likely to be good for domestic growth – but rhetoric on trade is likely to have global implications”
Not necessarily these policies will have bad consequences for the European market; however, the outcome might sometimes be difficult to predict. Here are few scenarios that we might see come to life in coming months:
#1 Increase of inflation
When the U.S. grows and its unemployment shrinks the inflation will most likely grow. Since American market has a big impact on other countries’ economies soon we will see a similar pattern in Europe.
Further inflation growth can be caused by tax reforms planned by Trump. That is likely to cause budget deficits.
Excessive deregulation that can spin into a financial crisis, similar to one we experienced in 2007, is another fear of Donald Trump’s presidency. Since the U.S. president planned to reverse some bank regulations. As a result, we might see a loosening of lending standards. We all remember that, among others, bank’s friable lending policies were the cause of 2007 – 2008 financial crisis.
#3 Slowdown of globalisation
Free trade, globalisation and open markets of which we all benefit today, regardless of our professional position, might come to a halt. As president Trump is planning to stimulate domestic production and trade Europe might see one of the biggest markets of the world closing for collaboration with other countries.
#4 Increase of interest rates
The strengthening of the dollar can cause debts of countries with emerging markets to increase. This could have a negative impact on countries, like the Czech Republic, Greece, Hungary, Poland, Russia and Turkey.
#5 Euro crisis
Some experts warn that Trump’s victory could trigger wins of the populists in the upcoming elections in the European countries as the anti-establishment movements became more popular in recent times. Even some economists see the breakup of European Union. Fortunately, so far European countries stand strong together.
Donald Trump presents a much different style of leadership than all previous American presidents. This might be why many fear his presidency. Certainly, as a president of the United States, he must have best interests of his country in his heart. Unfortunately, European countries and U.S.A. might not always see eye to eye. Experts and economists speculate trying to predict the future. In coming months we will see if the prediction will prove correct.
* Article is based on the article “10 economic consequences of Donald Trump’s election win
Anatole Kaletsky” https://www.theguardian.com/business/2016/nov/28/donald-trump-economic-consequences-us-election-growth