Trump administration poses risk to global economy: Fitch
11 February 2017
Fitch Ratings said in a report published yesterday that Donald Trump's presidency posed a risk to global economic conditions and global sovereign credit fundamentals.
Investors use sovereign credit ratings to gain insight into the level of risk their investment ran. Fitch is among three major rating firms that analyses the credit standing of countries.
"US policy predictability has diminished, with established international communication channels and relationship norms being set aside and raising the prospect of sudden, unanticipated changes in US policies with potential global implications," the report said.
The report identified three major risks from the policies of the Trump administration, including diminished international capital flows, limits on migration and changes to trade relations that could affect many countries.
The materialisation of these risks would put pressure on public finances, which might become less available or costly, making it difficult for many countries to repay their debts. Coupled with currency depreciation, it would in turn have a negative effect on the credit rating of these countries, Fitch explained.
Meanwhile Forbes said that many of the policies which Trump was talking about, which he would at least try and enact, were between not very good and no good. Restrictions on trade would only make all poorer given that trade was a positive sum endeavour.
It said that berating China for currency manipulation would not be productive when China had for the past few years been manipulating the value of the yuan up. It adds, Trump did say in the campaign that he would be doing the things his base voted for him to do, which was a refreshing change of a politician delivering on campaign promises.