Markets yet to come to grips with “Trump risk”
Republican presidential candidate seen by EIU as major threat to the world economy.
In mid-March, the Economist Intelligence Unit (EIU), part of the sister company to The Economist magazine, published its latest list of risks facing the global economy.
The ones with the highest ‘intensity’ — a product of probability and impact — were a hard landing for China’s economy and an emerging market (EM) debt crisis, while those with the lowest were an oil price shock and a British exit from the European Union (EU), or ‘Brexit’, following a closely watched referendum next month.
Yet it was one of the risks with a moderate intensity — more significant than the rising threat of jihadi terrorism and almost as severe as the risk of a break-up of the eurozone — that caught the eye of journalists.
The victory of Donald Trump, the flamboyant property developer who now looks certain to secure the Republican presidential nomination in July in the US election, due in November is, according to the EIU, a major risk confronting the world economy.
Over the next several weeks, financial markets are likely to become a lot more concerned about the threat of a Trump presidency than they were previously.
Indeed some of Trump’s policy pronouncements have already drawn scorn from economists and investment strategists.