Analyst: Donald Trump Presidency Could Spark a Global Economic Crisis

Global Economic CrisisA Donald Trump presidency may cause a global economic crisis, according to the Economist Intelligence Unit (EIU), a respected risk analysis firm.

Updating its global risk assessment, the British firm ranked the election of Trump a 12 on a scale of one to 25, or sixth on its latest list of global threats, making his election as serious as a resurgence of jihadi terrorism. According to the report, a hard landing for the Chinese economy remains the biggest cause to the global economic crisis.

“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,” the report said. It also said the U.S. property tycoon had been “exceptionally hostile towards free trade” during his campaign, and had advocated putting troops on the ground in Syria to fight Islamic State (IS). (Source: “Global risk: Donald Trump wins the US presidential election,” Global Forecasting Service, March 16, 2016.)

The EIU added that, “His militaristic tendencies towards the Middle East (and ban on all Muslim travel to the U.S.) would be a potent recruitment tool for jihadi groups, increasing their threat both within the region and beyond.” (Source: “‘President Trump’ as big a threat as jihadi terror to global economy – EIU,” The Guardian, March 17, 2016.)

The U.S. property tycoon and reality television star-turned-candidate is currently the favorite to win the Republican nomination. He has so far secured 673 delegates, compared to 411 for Ted Cruz and 143 for John Kasich. Trump needs to reach the magic figure of 1,237 delegates to snatch the nomination; approximately 1,061 delegates have not been allocated yet. The $4.0 billion businessman has warned there will be riots if he is denied the Republican nomination. (Source: “Trump Warns of Riots If He’s Denied the Republican Nomination,Newsweek, March 16, 2016.)

The EIU research paper concludes that it doesn’t expect Trump to defeat former U.S. Secretary of State Hillary Clinton in the race to become the next president of the United States. However, it suggests a turn of events, which could put Trump in the White House, stating, “There are risks to this forecast, especially in the event of a terrorist attack on US soil or a sudden economic downturn.” (Source: “Trump as big a global risk as terrorism: Research,” CNBC, March 17, 2016.)

“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,” it reads before adding that the economic impact would be felt widely, but particularly in the U.S. itself. (Source: The Guardian, op cit.)

Among other potential causes to the global economic crisis, according to the research paper, are: Russia’s interventions in Ukraine and Syria (the second biggest cause), currency volatility in emerging markets (the third biggest cause), the EU’s potential fracture, beset by external and internal pressures (fourth biggest threat); and a “Grexit,” followed by a eurozone breakup (fifth biggest risk). (Source: CNBC, op cit.)