The great unknown: how a Trump presidency could affect the world, in five charts
Subscribe to enjoy similar stories. US President Harry S. Truman once famously asked for a “one-handed economist" because he was tired of economists who, instead of giving decisive answers, would say, “On the one hand, this, and on the other hand, that." As 2024 ends, we can see why that’s so.
Economists again have two-handed theories about what’s coming for the world economy. The trigger? The election of Donald Trump as US president, which threatens to push the world towards greater uncertainty. This uncertainty is bad for India.
Like all emerging markets, India pays a high penalty for unpredictability. The weeks since the US election have already seen the rupee slide and foreign money flow out. While it’s common for market volatility to send investors scrambling for shelter, the problem is that right now, for every expected outcome, the opposite is just as likely to occur.
This is the uncertainty that Truman would have been wary of and that policymakers will have to face in the coming months. Take the US dollar for example. The dollar index jumped by 1.6% the day Trump’s victory was confirmed.
That was its largest one-day increase since September 2022. A plan to impose across-the-board tariffs on Mexico, Canada and China reinforced the view that tariffs would increase prices and keep US interest rates higher for longer. That explains the steep rise in the broad trade-weighted dollar index in the last quarter of 2024.
In response, as always, emerging currencies were beaten down more than the global average. The rupee-dollar rate dropped to 84.5 by the end of November, and is seen falling to 85.5 to 86 in the near term (Goldman Sachs). Also read: Why the increase in farm worker population is a worry But not everyone buys
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