Charting the Global Economy: Trump Win Reverberates Around the World

Content of the article

(Bloomberg) — Donald Trump’s decisive victory in the U.S. presidential election has world leaders preparing for how the next administration will shape the global economy.

In China, factories are ramping up shipments ahead of the Christmas holiday and may be waiting for escalating trade tensions. Emerging markets are hit hard when the dollar and US yields rise. And again in the US, economists predict that Trump’s proposals – especially on tariffs – will cause inflation and reduce growth.

Content of the article

Speaking after the Federal Reserve cut interest rates by a quarter point, Chairman Jerome Powell said Trump’s re-election would have “no impact” on the central bank’s policy decisions in the near term. The Bank of England also lowered borrowing costs for the second time this year.

China gave local governments 10 trillion yuan ($1.4 trillion) in debt but stopped short of releasing new stimulus, keeping room to respond to a potential trade war when Trump takes office next year.

Here are some charts featured in Bloomberg this week on the latest developments in the global economy, markets and geopolitics:

ACE

The former and future president have pledged to increase tariffs on all US imports and the largest mass deportation of migrants in history. He also wanted to talk about Federal Reserve policy. Many economists see the platform adding to higher inflation and slower growth ahead.

Trump’s stunning and decisive election victory has led to repricing in financial markets around the world. Powell should reassure global investors that the Fed can manage the impact of Trump’s second term – especially if it is accompanied by a sweep of the Republican Congress – which has changed expectations for the path of monetary policy.

Content of the article

Content of the article

Asian

Chinese officials announced details of a program to repay “hidden” local debt to the public balance sheet at a press conference in Beijing on Friday. While policymakers did not announce measures to immediately stimulate domestic demand, Finance Minister Lan Fo’an promised “stronger” fiscal policy next year, signaling bolder steps could be taken after Trump’s inauguration in January.

China’s export growth rose in October to the fastest pace since July 2022, adding to months of economic growth that could be undermined by Trump’s re-election and threats of tariffs. Last year, Chinese companies sent $500 billion worth of goods to America, accounting for 15% of all exports.

When Trump first started a trade war with China in 2018, Beijing found itself on the back foot and unsure how to respond. This time President Xi Jinping is more prepared to fight, even if he has to lose.

Europe

The BOE’s path to further easing has been complicated both by Chancellor of the Exchequer Rachel Reeves’ October 30 budget and the election of Donald Trump as US president. Britain now plans to spend £70 billion ($90.4 billion) a year on weddings, almost half of which is financed by debt. Trump has threatened higher tariffs in a new global trade war.

Content of the article

Traders cheered the possibility of more bond sales in Germany after the government’s figure for fiscal conservatives was fired, leading some in the market to speculate the new administration could be more tolerant of higher debt.

A third of Britain’s official “shopping basket” has fallen into deflation, providing another green light for the BOE to cut interest rates. The share of goods cheaper than a year earlier was the highest since spring 2021, before disruptions from the pandemic and Russia’s invasion of Ukraine sent prices soaring, according to a Bloomberg analysis of nearly 220 goods and services that make up the Consumer Price Index.

The market is developing

Inflation crossed above the central bank’s tolerance range in Brazil and accelerated more than expected in Chile as rising energy costs gave policymakers cause for concern. Interest rate futures rose in both countries as investors made policy plans to become more hawkish.

A rally depressed-debt driving results in high-yield funds still have room to open in countries as diverse as Argentina and Ukraine, according to the hedge fund with one of the best performances in the asset class.

Content of the article

the world

Vietnam is one of the most trade-dependent countries in the world – exports account for about 85% of the economy and the US is its biggest market. Vietnam had a surplus of about $100 billion with the US last year, the fourth largest imbalance with the US after China, Mexico and Canada, and one that continues to grow. At some point this may put Vietnam in Trump’s eyes.

In addition to the Fed and the BOE, policymakers in Sweden, Pakistan, the Czech Republic, Peru, as well as Gulf countries including Saudi Arabia, the United Arab Emirates and Qatar were also cut. Australia, Malaysia, Poland, Norway, Serbia and Romania held. Brazil’s central bank doubled the pace of tightening and spelled out more explicitly the need for spending cuts to help inflation above its target.

—With contributions from Philip Aldrick, Andrew Atkinson, John Boudreau, Rebecca Choong Wilkins, Alice Gledhill, Selcuk Gokoluk, James Hirai, John Liu, Matthew Malinowski, James Mayger, Colum Murphy, Tom Rees, Andrew Rosati, Catarina Saraiva, Fran Wang and Carolina Wilson.

Content of the article