Global rating agency Standard and Poor's (S&P) in its latest report on effect of Trump’s victory in the presidential elections on Asia-Pacific economies, has said that India will be less affected by changes in growth and monetary policy in the new set-up under Donald Trump administration due to its large domestic economy. However, S&P said that many key US policies under the new administration remain undefined, leading to unusual uncertainty around the baseline outlook.
As per the report, the effect of changes in the US growth and monetary policy on Asia’s trade and general financial market confidence, whether positive or negative, will be greater on smaller and more open economies of the region. It added that countries with large domestic economies like China, Japan, India and Indonesia will be less affected. The rating agency also said a firm judgement could be drawn after formation of Trump's economic team.
The rating agency, however, listed both upside and downside for Asia- Pacific region under Trump administration. In case of downside, Trump administration would impose punitive import tariff of 45 percent on China basing on its currency manipulation, while on the upside Trump has argued for Keynesian- style infrastructure spending increases and tax cuts, which could boost US growth and demand for Asia’s exports, at least in the short run.
