With the United States’ presidential election looming, AMP Capital chief economist Shane Oliver has discussed the potential ramifications for Australia if Donald Trump were to be elected.
Speaking to Mortgage Business, Mr Oliver predicted that the initial reaction to Trump’s election would be “a negative one”.
“[It would be] bad news. There would be a lot of uncertainty around what he will do,” Mr Oliver explained. “Shares would sell off globally and in Australia, and then there would be an element of waiting.”
“Is he going to be the anti-globalist, populist that he’s portrayed himself as, or is he going to be more pragmatic?”
Mr Oliver went on to say that the main risk that Mr Trump’s presidency would pose to the Australian economy would be his policies on trade.
“If he implements his desire to slap tariffs on China and Mexico and other countries and we end up with a global trade war – and Australia has a much bigger exposure to global trade than the US does – it would particularly hurt a country like Australia if that happens,” Mr Oliver elaborated.
In response to yesterday’s Reserve Bank decision to keep the official cash rate on hold at 1.5 per cent, data insight director at RateCity.com.au Peter Arnold said that the RBA is likely to closely monitor Australia’s CPI data in the wake of next week’s US Presidential vote.
“The perfect storm is brewing with the US election on a knife edge, and Trump and Clinton within sight of the White House, which is expected to cause further volatility for our currency,” he explained.
The US presidential election will take place on November 8.
[Related: RBA tipped to ‘sit tight’ on rate today]