Trump’s Presidency: What to Expect for Thailand?
Published in EIC Outlook Q1/2017 Click here for more detail
Epitomizing the feisty, anti-establishment sentiment that has taken hold around the world during the past year, Donald Trump’s stunning presidential election victory has upended the U.S. economic outlook. It has also introduced a real risk that the government of the world’s largest economy might adopt extreme policies, such as the launch of a trade war against China or mass deportations of illegal immigrants, based on fiery threats Trump made during his campaign. Even if these proposals were not aimed directly at Thailand, they would have indirect consequences for the Thai economy if enacted as uncertainty regarding policy could lead to instability in financial markets, and decline global trade if the U.S. were to adopt a protectionist stance.
Yet investors--after overcoming an initial wave of alarm following the election--upgraded their outlook for the U.S. economy for the next one to two years in anticipation of a new jolt of fiscal stimulus. U.S. stock markets fell on Election Day, but rebounded swiftly. The NASDAQ, Dow Jones and S&P 500 indexes all hit record highs, and the dollar strengthened. This reflected investors’ confidence that the incoming cabinet will successfully implement stimulative fiscal measures such as tax cuts and infrastructure investment. At the same time, investors discounted the likelihood of the most extreme trade protectionism and harshest anti-immigrant measures that Trump brandished as a candidate. Nevertheless, rising uncertainty could trigger volatility in financial markets. Trump has consistently touted an “America First” approach that would adopt an aggressive stance in policy and negotiations. This approach would ramp up bilateral sanctions while deemphasizing multilateral agreements and relationships. China and Mexico would be hit hardest, since these are the two countries Trump has blamed for job losses in the U.S. It would also affect Thailand, given strong and extensive trade and investment ties with China. 21 Major policies that Trump can do without Congress and needs Congress consent
Source: EIC
