Despite the record levels of Wall Street and the apparent idyll that the Bags live with Donald Trump, the new way of doing politics from his administration begins to cause great concern among many market actors, including rating agencies.
Fitch has not been walked by the branches and in a note published this Friday has warned that the Government of Trump represents “a risk to the conditions of the international economy and the foundations of the sovereign credit globally”.
According to the credit rating agency, with the arrival of Trump to the power policies of the EU have been made less predictable, as both the president and his Government team have left to one side the normal channels of international communication and the usual norms of relations with third countries, increasing the expectations of “sudden changes and unexpected events in the american policy,” with possible impact on the global environment.
Among the main risks to the ratings, the sovereign, Fitch mentioned twists “harmful” in the trade relations maintained up to now, the reduction of international capital flows, the impact on remittances of the vetoes migration, and political confrontation between Trump and other leaders, thus helping to cause volatility in the financial markets.
The signature of the rating warns that the materialisation of these risks would give rise to a negative scenario for the economic growth and would get pressure on the public accounts of some countries, which could have implications unfavorable on the rating of its debt.
Increase of the financing costs
The threats do not end here: Fitch warning also of an increase in costs of external financing, that could also become less accessible.
The agency recognizes that some measures foreseen in the agenda Trump could have a positive effect on growth, as increased investment in infrastructure in the united States, or the possible lowering of taxes and fiscal charges.
in Addition, does not rule out that after the “been” out of action “disturbing,” adopted by the new Administration in his first weeks of Government, the policy of Trump may tend to normalise and enter into a dynamic and more stable in the field of trade and business.
however, the vision of Fitch is not exactly optimistic. The agency believes that the balance of risks is tilted towards a global scenario “less benign”. In this regard, he recalled that the Government of Trump has already broken the trade agreement with the Pacific, has confirmed that it will renegotiate the Free Trade agreement of North America, has been threatened with sanctions by us multinationals investing overseas, and has launched against Germany, accusing it of manipulating the euro at the expense of EU.
Precisely, the president of the German Bundesbank, Jens Weidmann, has shown today its concern about “the rejection of open markets and the tones protectionist” of the Administration to Trump.
“The exchange and international competition encourage the diffusion of new productive ideas and new products better. In this way they increase productivity and enable it to offer cheaper goods and pay more productive employees higher wages,” said Weidmann in a ceremony in Hamburg.
The attitude of Trump may change in the future, but, as pointed out by Fitch, the aggressive tone of the american president and members of his cabinet did not foresee, precisely, a path of roses in the bargaining processes that are coming, “or suggests that there is too much margin for commitment”, concludes the rating agency.
estrategias@eleconomista.mx
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