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Trump presidency "definitely not good" for New Zealand economy: think-tank

Xinhua, November 3, 2016 Adjust font size:

The election of a President Donald Trump in next week's U.S. election would be "horrible for the New Zealand economy," a leading independent think-tank said Thursday.

The destabilizing effects on the New Zealand economy of Trump as President were outlined in a note titled "Trumponomics: risks for the New Zealand economy" released by the New Zealand Institute of Economic Research (NZIER).

"If Trump beats the odds and emerges victorious, we expect significant instability in financial markets," NZIER deputy chief executive John Ballingall said in a statement.

"Borrowing costs for New Zealand firms and mortgage-holders are likely to rise as credit conditions tighten in the face of uncertainty. The New Zealand dollar could appreciate against the greenback in the short-term if markets are concerned about future U.S. competitiveness, although this might be offset by traders moving away from more peripheral currencies."

If Trump enacted his economic policy campaign promises, the U.S. economy was likely to grow slower in the medium term, Ballingall said.

"One estimate is that Trump's policies will see 4.8 million job losses. A weaker U.S. economy will have a negative impact on the 8.4 billion NZ dollars (6.12 billion U.S. dollars) of goods and services we sell to the U.S.. This will be of particular concern to the meat, dairy, wine, wood and tourism sectors," he said.

Trump had promised to impose huge tariffs on Chinese and Mexican imports, and rip up trade agreements like the North American Free Trade Agreement (NAFTA) and the still-unratified Trans-Pacific Partnership.

He was also no fan of multilateral institutions like the World Trade Organization and United Nations.

"This is the biggest area of concern for New Zealand in the long term. We benefit enormously from a stable global trading environment," Ballingall said.

Under a Trump presidency, the chances of further Asia-Pacific regional economic integration would be much reduced, and trade barriers facing New Zealand exporters were more likely to remain, he said.

"Trump is delivering a message that the U.S. will do what it likes, and bugger the consequences for everyone else. We are looking at much more isolationist and protectionist U.S. trade and foreign policy settings. That's not good for the U.S. economy or the global economy, and definitely not good for the New Zealand economy." Endit