The Economist says Trump presidency would threaten global economy
The analysts weigh in on how a Trump administration could affect global markets and foreign policy.
A leading global forecasting service has just ranked a Donald Trump presidency at No. 6 on a list of major threats to the global economy, somewhere between the utter collapse of the Chinese market and a new cold war between Russia and the West.
That said, these same experts do not expect Mr. Trump to win the nation's highest office.
But if he did win, economists say that Trump’s lack of detailed policies, constant self-revision, unlikeliness to listen to advisors and being “exceptionally hostile towards free trade” add up to a high risk to both global economy and stability should he become president.
“Although we do not expect Mr. Trump to defeat his most likely Democratic contender, Hillary Clinton, there are risks to this forecast, especially in the event of a terrorist attack on US soil or a sudden economic downturn,” is the opinion rendered in a Global Risk Assessment published online by The Economist’s Intelligence Unit. “It is worth noting that the innate hostility within the Republican hierarchy towards Mr. Trump, combined with the inevitable virulent Democratic opposition, will see many of his more radical policies blocked in Congress – albeit such internal bickering will also undermine the coherence of domestic and foreign policymaking.”
Robert Powell, risk manager for The Economist’s Intelligence Unit and one of the assessment authors says of Trump in a telephone interview, “He’s very anti-NAFTA," he said referring to the North American Free Trade Agreement.
“The peculiar thing is, he’s a businessman, so you’d have thought he’d be acutely aware for the benefits of free trade, given that he imports many of his own goods from China,” Mr. Powell adds. “If he did a U-turn, a 180, and decided that in fact free trade and the movement of goods was in fact good for business and should be encouraged, then that would be not only good for the world economy and good for the United States, but it would probably be good for Trump Incorporated.”
However, Powell says, “The problem is that he’s obviously gone in a very different direction. I can’t speculate as to his motivations, but it does smack of populism, when in fact businessmen have a very, very different, in fact entirely opposing point of view.”
In addition, Powell points out that Trump has “taken what we would consider completely the wrong line on immigration, as well as free trade.”
The Economist is generally supportive of immigration, particularly of skilled workers while, Powell says, “Mr. Trump seems to be strongly opposed to immigration from around the world, and he has used strident language against Muslims."
Economist Barry Bosworth, senior fellow at the Brookings Institution writes in an email response for interview, “I am not a Trump supporter, but believe the risk of his election is still very low. If he wins, I would be more concerned about what his victory implies about the thinking of Americans than Trump per se… His election would be a cataclysmic global event with enormous implications for other countries.”
“It would be extremely bad for the global economy. It implies enormous US hostility to global trade and our policies toward minorities,” Dr. Bosworth adds. “I do not understand the Economist editors labeling Democratic opposition as virulent.”
Bosworth adds, “If he won, it would undoubtedly be a thoroughly Republican congress, so I don’t understand their assumption that Democrats would have any power to block his policies.”
“The Republicans will probably hold both houses, and the point being that you won’t have the normal opposition you have with other parties you have the opposition from his own party which is going to make it extraordinarily difficult for him to get anything done,” Powell responds. “The political dysfunction we’ve had during the Obama presidency will fairly pale in comparison to the chaos we’re going to have during a Trump presidency.”
Asked if there is anything Trump could do to repair his image and change this forecast, Powell says Trump “would have to do a complete 180 on his policies” on NAFTA, immigration, the wall along the Mexican border and his rhetoric concerning Syria and foreign oil confiscation.
“Which he might, given the way he tends to change his mind,” Powell says.
Those hoping for an imminent announcement of a comprehensive Trump policy to emerge any time soon may be disappointed.
“I don’t think he is interested in articulating a set of policies at the moment,” Bosworth says. “He is presenting a perspective that resonates with a surprising number of white, less-educated Americans who feel threatened by global and domestic trends. His main themes have been quite consistent. I think that he likes being perceived as high risk abroad, and see little reason to reduce those factors at present.”
But the greater concern may be that no matter who Trump names as his advisors, he might not take heed.
“One of the issues with Mr. Trump is that he has a hyper-extended ego and it’s difficult to see who he would actually listen to if he had an advisor,” Powell says. “He obviously has the thinnest of thin grasps on global politics and global economics and he’s also prone to make decisions on the fly.”
"So you can’t really have a president say he’s building a wall and then change his mind a week later. You can’t have a president saying you should have a trade war with China and changing his mind a week later. You certainly can’t have a president invading Syria and changing his mind a week later. So it is a huge concern that he wouldn’t be taking advice from others in particular because he has this record of constantly shifting.”
Powell concludes, “None of this bodes particularly positively for the United States and the state of the global economy.”
The Trump campaign did not respond to multiple requests for comment.