Change in Sentiment – Europe May Benefit From Donald Trump’s Presidency

Instead of boosting economic growth in the US, Donald Trump’s presidency rather seems to be having a positive impact on growth in the European Union. This is the result of a special question in the ZEW Financial Market Survey, a survey conducted regularly by the Centre for European Economic Research (ZEW) in Mannheim. According to the results, 32 per cent of the respondents expect Trump’s presidency to have a positive impact on economic growth in the EU.

Around 71 per cent of the survey participants expect EU Member States to increase their spending. In contrast, 73 per cent of the financial market experts expect Trump’s presidency to have neither positive nor negative effects on US economic growth.

The results show that there has been a significant change in expectations in recent months regarding the Trump administration’s impact on the EU economy. In December 2016, merely 24 per cent of the survey participants anticipated positive effects on EU GDP, while 15 per cent expected public spending to rise in EU countries.

“Stark contrast”

According to the current survey, 41.7 per cent of the financial market experts expect US exports to decrease over the course of Trump’s presidency. At the same time, 85.5 per cent of the respondents do not anticipate any changes with regard to imports into the US. At least 26.4 per cent of the participants believe that Trump’s policies will lead to an increase in long-term interest rates. Furthermore, 78.1 per cent of the financial market experts expect US government expenditure to stagnate under the Trump administration.

“These findings are in stark contrast to the survey results of December 2016,” explains Michael Schröder, senior researcher in ZEW’s Research Department “International Finance and Financial Management” and project leader of the ZEW Financial Market Survey. “Back then, an overwhelming majority of 86 per cent expected the US economy to experience stronger economic growth, and 77 per cent predicted increases in US public spending. This sentiment has changed drastically, as reflected in the responses to the most recent special question,” says Schröder.

For further information please contact:

Dr. Michael Schröder, Phone: +49 (0)621/1235-368, michael.schroeder@zew.de