London-The U.S. economy is expected to witness a sudden deflation, not because of the negative effects of the global economic developments or the monetary policy adopted by the Federal Reserve System, but in case Donald Trump become the country’s president.
Oxford Economics for economic research has said that the U.S. economy may deflate by $1 trillion in 2021 if Republican candidate Trump wins the presidential elections in November. Oxford has considered that Trump’s policies including the measure of additional trade protection, tax reductions, and deportation of discrete expats may have negative effects; it also said that if the Republican candidate succeeds in implementing his policies, consequences may be far beyond the expected deflation and will cost 5% of the U.S. GDP.
From his part, Trump has vowed to push the country’s economy toward growth and to work on recovering the industrial sector by banning local companies such as Apple from manufacturing its products abroad; renegotiating international trade agreements; reducing federal taxes and regulative lists; he has also promised to provide opportunities, prosperity, and security to U.S. citizens.
Oxford has forecasted the U.S. GDP to grow by 2% in 2018 to reach $18.5 trillion in 2021. In case Trump was elected and implemented his policies, the institution has expected the growth to slow sharply and to approach 0% by 2019, which will shrink the GDP to $17.5 trillion.
Trump will face difficulties in receiving the Congressional support for all his policies; however, some economic experts see that reducing fiscal policy may in fact help in enhancing economic growth.
On Monday, Trump revealed that Janet Yellen, chair of the Board of Governors of the Federal Reserve System, is maintaining low interest rates because of political pressures by President Barack Obama and has raised question marks on the institution’s independence.