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Economy

Asymmetric economic risks from the American elections to Europe

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A little less growth, lower inflation and more uncertainty is the perfect recipe for slightly faster rate cuts from the ECB.

Ασύμμετρα &tau ;αοκομικαπo τισαερ&iota ;κνιεκογινεπη /></p> <p>Trade, immigration, fiscal policy and the supervisory agenda are the four critical fronts that Bank of America analysts will be watching to gauge the impact of the US election on the global economy.</p> <p>As for the Europe, however, emphasize that the risks are asymmetric, since as they point out, there are only negative scenarios.</p> <p>Any aggressive changes in trade policies can lead to retaliation and changes in trade flows, negatively affecting global economic growth. And in the absence of any major fiscal stimulus to the US economy, the risks facing Europe are slightly less growth, lower inflation and slightly faster moves from the ECB.</p> <p><strong>Fiscal Policy </strong></p> <p>Fiscal policy to be implemented in the US could affect Europe if there is a shift large enough to create significant additional demand, boosting growth and inflation. But BofA doesn't expect such a big change.</p> <p>The fallout from tariff increases on either side could hit growth directly through lower exports, analysts note. And they remind that 16% of European exports are directed to the USA. Overall, however, the impact of the tariff increase could be a little less growth and much lower inflation for Europe</p> <p><strong>Geopolitics 'key'</strong></p> <p >Once the Republicans are in a position to control the White House and at least one house of Congress, US foreign aid will be reduced in favor of defense spending, which has a more direct benefit to the US economy. And this, BofA emphasizes, would also affect Europe.</p> <p>In such a scenario, Europe would have to step up its own defense effort, while there is not much scope in national budgets for such a thing. . Uncertainty would therefore increase.</p> <p><strong>European Central Bank</strong></p> <p>Slightly less growth, lower inflation and more uncertainty is the perfect recipe for slightly faster rate cuts than the ECB. The risk to this scenario is if there is a much larger fiscal stimulus in the US, which brings better economic momentum to Europe, leading the ECB to move more slowly.</p> <p><noindex></p> <div class=Source: www.kathimerini.com.cy

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