The Economist’s Global Risk Index now includes Donald Trump’s presidency.
The full list:
- China experiences a hard landing
- Russia’s interventions in Ukraine and Syria precede a new “cold war”
- Currency volatility culminates in an emerging markets corporate debt crisis
- Beset by external and internal pressures, the EU begins to fracture
- “Grexit” is followed by a euro zone break-up
- Donald Trump wins the US presidential election
- The rising threat of jihadi terrorism destabilises the global economy
- The UK votes to leave the EU
- Chinese expansionism prompts a clash of arms in the South China Sea
- A collapse in investment in the oil sector prompts a future oil price shock
Thus far Mr Trump has given very few details of his policies – and these tend to be prone to constant revision – but a few themes have become apparent. First, he has been exceptionally hostile towards free trade, including notably NAFTA, and has repeatedly labelled China as a “currency manipulator”. He has also taken an exceptionally right-wing stance on the Middle East and jihadi terrorism, including, among other things, advocating the killing of families of terrorists and launching a land incursion into Syria to wipe out IS (and acquire its oil). In the event of a Trump victory, his hostile attitude to free trade, and alienation of Mexico and China in particular, could escalate rapidly into a trade war – and at the least scupper the Trans-Pacific Partnership between the US and 11 other American and Asian states signed in February 2016. His militaristic tendencies towards the Middle East (and ban on all Muslim travel to the US) would be a potent recruitment tool for jihadi groups, increasing their threat both within the region and beyond.
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. 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.
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