SINGAPORE (Aug 31): As the clock continues ticking down to the November US Presidential election this year, opinion polls and prediction markets are increasingly beginning to indicate a higher likelihood of Hillary Clinton’s victory over Donald Trump.
Not much is going to change should the expected occur – which simply means that a Clinton Presidency would offer the benefits of continuity, according to the Bank of Singapore.
“Realistically, Clinton’s main attraction is that she is not Trump,” states chief economist Richard Jerram in a Wednesday report.
“This is why she is well ahead in polls despite having unusually high negative ratings. From a financial market perspective, it means that the impact of her winning would be avoidance of the unpredictability and disruptive policies that could come from a Trump Presidency,” he explains.
What is likely to happen: Clinton Presidency would ‘kill’ TPPA
Despite largely offering continuity, Clinton has decided to follow Trump’s anti-trade lead and claimed she intended to renegotiate the 12 nation Trans-Pacific Partnership Agreement (TPPA) before its approval, even if she was formerly supportive of it. Jerram says Clinton’s election as president would hence “kill the [TPPA] deal”, or at least delay it by years. “Clinton might be hoping that President Obama will force the bill through in the lame-duck session after the November elections,” he adds.
What would be avoided: Disruptive policy changes
Now that Bernie Sanders is out of the picture, Jerram suspects Clinton would be “more moderate” as president, in terms of policy. He opines that her previous policy platform was “pulled to the left of centre” as a result of the “need to fend off the persistent challenge” from her former presidential candidate rival. Clinton’s tax proposals generally appear uncontroversial too, although a Democratic president would struggle to push for tax reform through a Republican Congress, notes the economist.
What may take place: Some impact on US growth
While Jerram says a lack of disruption appears attractive for a US economy that is recovering from financial crisis and is close to full employment, he believes Clinton lacks policies that might have much impact on the US’s poor productivity growth. Most of her emphasis has been on social issues that are of “limited interest to financial markets”, he says.
There is, however, some talk about boosting investment in infrastructure and research such as making the US a clean energy superpower, although details were not elaborated on. Such a scenario would boost growth in the US economy, especially if additional investments are funded by debt rather than through the means of higher taxes.
“Unlike Trump, Clinton’s views on foreign policy do not differ significantly from Obama. The risk of disruption to the balance of power in Asia or the Middle East would be low,” Jerram concludes.
“Avoidance of a negative would be the main positive.”