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3 Nov 2020

International Economy

US Presidential Election Results: US Economy Set to Recover Faster and US Dollar May Weaken if Biden Wins as Expected (Business Brief No.3894)

  • ​Various polls and projections all show that Joe Biden, the democratic presidential candidate, will win the 2020 US presidential election on November 3, 2020. Biden's victory and the Democrats' domination in both the House of Representatives and Senate would be a boon for the overall US economy as the implementation of massive economic stimulus measures and passage of the federal budget bill may be smoother than in the case that the Democrats have a majority in only one house. Given this, we at KResearch project that the US economy will grow at least 3.0 percent in 2021 while the greenback is set to weaken across the board due to the global risk.    
  • However, if the election results do not go as market expected and President Trump wins the second term, regardless of whether his votes are higher than Biden's or election results are contested, it is expected that global fund flows will become very volatile. The US stock market indices may decline while the US Dollar will likely soften despite increased risks to the US economy.  
  • In the case that Joe Biden is elected as the new US President and the Democrats hold the majority in both houses, it is expected that the US economy will grow faster, as compared to the case that President Trump is re-elected, by not less than 1 percent in 2021. KResearch assesses that if the US economy grows by 1 percent, the Thai economy may expand by 0.2 percent in 2021 (based on assumptions that the political situation in Thailand does not escalate, and there is no serious resurgence of the COVID-19 pandemic) through the direct effect of increased Thai exports to the US and the indirect effect of the global economic recovery, when compared to the case that President Trump is re-elected.
  • Concurrently, the Thai Baht will continue to strengthen in line with the weak greenback regardless of whoever wins the US presidential election. However, if Biden wins, risks to the global economy may ease, capital will likely flow back to assets with greater risk and the US Dollar may weaken substantially. As a result, the Baht will likely strengthen faster than the case that President Trump is re-elected. In addition, if risks, including political issues and the COVID-19 pandemic do not heighten, it is expected that the Baht may increase from the current level of THB31.15/USD at the end of 2020. 


International Economy