Editor’s note: This story has been updated.
The London-based Economist Intelligence Unit, a global forecasting service, ranks Donald Trump winning the U.S. presidential election as one of the top 10 risks facing the world economy.
“The businessman and political novice, Donald Trump, has built a strong lead in the Republican Party primary, and looks the firm favorite to be the party’s candidate in the U.S. presidential election in November,” the EIU writes in its Global Risk Assessment, which was published online yesterday.
The report cites the New York City business mogul and reality television star’s hostility toward free-trade agreements and China, as well has his “exceptionally right-wing stance on the Middle East and jihadi terrorism, including, among other things, advocating the killing of families of terrorists and launching a land incursion into Syria to wipe out” the Islamic State group.
“In the event of a Trump victory, his hostile attitude to free trade, and alienation of Mexico and China in particular, could escalate rapidly into a trade war — and at the least scupper the Trans-Pacific Partnership between the U.S. and 11 other American and Asian states signed in February 2016. His militaristic tendencies towards the Middle East (and ban on all Muslim travel to the U.S.) would be a potent recruitment tool for jihadi groups, increasing their threat both within the region and beyond,” the EIU said.
The report ranks a Trump victory in the election as a “moderate probability,” which could become more certain if there is a terrorist attack on U.S. soil or an economic downturn.
Robert Hartwig, an economist and president of the New York City-based Insurance Information Institute, says the EIU characterization of the effect of a Trump presidency is a little too premature and speculative.
“We have to separate election-year bluster from what will actually happen in terms of policy pursued by a new president. The president always works within confines of Congress,” he said.
“The reality is that the Republican and Democratic parties have clearly moved away from the more-pro-trade stance that they’ve had in previous presidential election cycles. Even Hillary Clinton has moved away from her support” of the Trans-Pacific Partnership, a trade agreement signed earlier this year among 12 Pacific Rim countries, including the United States.
A possible Trump election win ranks at No. 6 on the EIU top 10 list, tied with the rising threat of jihadi terrorism destabilizing the global economy, coming in above the United Kingdom voting to leave the European Union, an armed clash in the South China Sea, and a collapse in oil sector investment leading to an oil-price shock.