The stunning election victory of Donald Trump and the defeat of market favorite Hillary Clinton rattled financial markets across the globe Wednesday. But just as soon as the shock ebbed, the same markets rallied Thursday as the despair was replaced by hopes that Trump’s plan to bolster the US economy would succeed.
It is too early to tell the economic implications of a Trump administration. Global markets during the campaign period have viewed Clinton as market-friendly and deemed Trump as protectionist—one who will put up trade barriers to discourage imports and recall American jobs taken away through outsourcing operations.
Trump’s rhetoric, some of them on the extreme side just like those of President Rodrigo Duterte, may remain just like that, and not translate into action. It will take the majority of US Congress, for instance, to dismantle free trade agreements that are already in force with the European Union, Asian countries and the rest of the world.
Trump’s victory was unexpected by many. As such, his ascendancy as the 45th US president introduced an element of uncertainty in the future political and economic directions of the world’s most powerful nation and biggest economy.
How the US Federal Reserve Board will proceed with an expected increase in interest rates next month is now a subject of speculation. The US Fed’s policy, generally based on the performance of the US economy, may be swayed by Trump’s overall plan which he will soon announce.
The Philippines and the rest of US trading partners, meanwhile, will have to second-guess Trump’s protectionist stance. At stake in the Philippines is the business process outsourcing sector, which last year brought in revenues equivalent to around 10 percent of the gross domestic product.
The Information Technology and Business Process Association of the Philippines estimated that the BPO industry as of end-2015 had generated 1.2-million direct jobs and $22 billion in revenues. Economic Planning Secretary has feared fewer investments may come from the US if Trump makes good his threat.
But given the nature of global trading and business operations, the Philippine still has a lot of economic partners to rely on. All Manila has to do is make its business environment friendly and stay competitive as much as possible.