The US Presidential election is now a “large wildcard” that could potentially derail what currently looks a very rosy economic situation in New Zealand, ASB economist say.
In their latest Economic Weekly, the ASB economists say our economy is chugging along nicely and there are rosy prospects for future economic growth.
But, however, they point to potential risks from the outcome of the US election.
New developments in the Hillary Clinton emails saga over the weekend have cast renewed doubt about whether she will in fact – as had been widely expected – triumph over Republican candidate Donald Trump.
“…There is a lot of uncertainty about what would happen if Donald Trump triumphs over Hillary Clinton,” the ASB economists say.
“For a start though, there would likely be a lot more trade tension, particularly with China, and a shift in the geopolitical balance, if the US turned inward.”
The economists say that with New Zealand’s economic prosperity based on trade, any Trump-initiated trade wars would put that at risk.
“At the same time, Donald Trump’s fiscal policies are likely to be inflationary, meaning an earlier return of higher interest rates and a strengthening USD.
“With just 9 days left to the election, it may be time for markets to start holding their breath,” the economists say.