Citigroup: A Trump Victory in November Could Cause a Global Recession
Source: Bloomberg
The election of Donald Trump as President of the United States could lead to chaos in markets and increased policy uncertainty that tip the world into recession, according to Citigroup Inc.
"A Trump victory in particular could prolong and perhaps exacerbate policy uncertainty and deliver a shock (though perhaps short-lived) to financial markets," writes a team led by Chief Economist Willem Buiter. "Tightening financial conditions and further rises in uncertainty could trigger a significant slowdown in U.S., but also global growth."
Buiter, for his part, has been warning of a global recession for nearly a year, though he previously saw a deceleration in Chinese growth as the proximate cause.
In what they deem to be a "conservative" estimate, Citi's team suggests that a Trump victory would cause a one-standard deviation tightening in U.S. financial conditions and pick-up in global policy uncertainty, which would adversely affect consumption and investment in both the U.S. and the rest of the world:
Read more: http://www.bloomberg.com/news/articles/2016-08-25/citigroup-a-trump-victory-in-november-could-cause-a-global-recession
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