Economists caution Trump’s reelection could reshape global economic landscape
Date
10/30/2024 5:33:08 AM
(MENAFN) Economists are cautioning that a second term for Donald Trump could significantly reshape the global economic landscape, with potential increases in trade barriers and prolonged high-interest rates, as reported by a US-based newspaper. Trump has made clear his intention to impose substantial tariffs, particularly on Chinese imports, similar to the policies he enacted during his first presidency. Such measures could intensify trade tensions and have a lasting impact on international supply chains.
In a related discussion, Christine Lagarde, President of the European Central Bank, highlighted at the International Monetary Fund meeting that growing trade barriers could have far-reaching consequences, potentially raising global inflation and decreasing global GDP by up to 9 percent. Lagarde’s concerns emphasize the risks that protectionist policies pose to the global economy, as they could limit access to affordable goods and services while dampening overall economic growth.
The Wall Street Journal also noted that Trump's proposed spending could push the US national debt to new highs, contributing to inflationary pressures. Higher inflation could compel the Federal Reserve to maintain or even raise interest rates, which would, in turn, drive up borrowing costs worldwide and likely put pressure on stock markets, with potential ripple effects in emerging markets and global economies.
Investor Jory Nodeker of Polar Capital added that, under Trump’s spending plans, the yield on the US 10-year Treasury bond could reach 5 percent, a level that would profoundly impact global financial markets. A rise in bond yields to this extent could reduce the valuations of stocks and other financial assets, as investors may seek safer returns, shifting capital away from equities and toward government bonds.
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