In terms of monetary policy, Holmes said Trump’s policies will create a strong dollar and may lead the US Federal Reserve to stop cutting rates or at least slow down its easing cycle.
“That’s going to hurt countries where they’re particularly concerned about their currency – Indonesia, for example. (In) Japan, the yen has sold off amongst a strong dollar,” he said.
In South Asia, countries like Bangladesh, Pakistan, Sri Lanka and the Maldives will be affected, but India will likely be spared, he added.
“India seems to be relatively isolated. It doesn’t depend on external trade a lot for its GDP (gross domestic product), and it seems to have relatively good relations with Trump.”
RELATIONS WITH CHINA
As for US-China relations, Assoc Prof Chong said it depends on what Beijing meant when it called for a “peaceful co-existence” following Trump’s victory.
“Previously, they’ve articulated an idea that the US influence goes up to the middle of the Pacific – Guam and so on – and everything two points west should come under some sort of sphere of influence by Beijing,” he noted.
“So it comes down to a question of whether Trump is willing to accept that, and also the other actors in the region – how they wish to live with, or contend or respond to such a potential situation.”
Assoc Prof Chong also pointed out that the world is a lot more protectionist today than during Trump’s first term, with China more concerned about protecting and boosting its own economy.
He added: “(In) 2016, there was a lot more hope that China – and also Europe – would be more open to trade, to economic liberalisation. That has proven not to be the case (now).
“Asia is (now) perhaps far less comfortable …than it was in 2016.”
