President-elect Donald Trump is likely to have a significant effect on the US economy, but it could be “smaller and slower” than most investors expect, according to Deloitte.
Policy changes likely to be enacted by Mr Trump could be net negatives on both the Australian and global economies. However, “a number of those negatives will be years in the making”, Deloitte Access Economics partner Chris Richardson says.
“A point that Deloitte Access Economics regularly makes is that, just because something is on the front page, that doesn’t necessarily mean that it is big news for businesses,” he said.
Mr Richardson said the US economy has “remarkably strong checks and balances” which over a number of years have “increasingly solidified into gridlock”.
“Accordingly, the US presidency is rather less powerful than popular opinion would have it and actual policy change is likely to prove to be a small fraction of what has been foreshadowed in the campaign,” he said.
Mr Richardson said investors should focus more on the “longer term implications” as the policies likely to be most influenced by the incoming president will be foreign policy issues such as trade and climate change.
“So this isn’t Brexit, it is a rather bigger shift in the global and Australian dial. Equally, however, you shouldn’t panic. Most of the short-term reactions have been over the top.
“The business implications of a Trump presidency are likely to prove smaller and slower than the headlines of recent days would otherwise suggest.”
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