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22 Oct 2020

International Economy

2020 US Presidential Election: Uncertainties Likely to Persist Until Inauguration Day, January 20, 2021 (Current Issue No.3150)

​Special attention is being paid to the 2020 US presidential election, in particular visions and policy guidelines of presidential candidates to revive the US economy as the country is battling the coronavirus (COVID-19) pandemic. KResearch is of the view that if Joe Biden, who is leading in the US election polls at the moment, becomes the new US President, the US economy may grow at least 3.0 percent in 2021, which would be higher than the projected growth of less than 2.0 percent in the case that President Trump can secure his reelection due to his administrative constraints. However, the outcome remains to be seen until the official announcement of the US presidential election results on January 20, 2021.     

              If the endorsement of the US presidential election results is delayed, it is expected that the financial and capital markets will be affected over the short term. The greenback, being a safe haven currency, may strengthen while risky assets will likely experience increased sell-off. Over the medium- to long-term, the US Dollar may soften in line with the Fed's signals of more monetary easing. It will likely be pressured further as a result of the US fiscal deficit in the case that Biden wins the election.           

Meanwhile, the direct impact of the new US president on Thailand's real economic sector during 2021 may vary depending on the overall US economic recovery. If Biden becomes the new US President, it is expected that the US economy will improve, and this may help bolster exports of Thailand's key consumer products to the US such as computer equipment and related parts, rubber products, and processed seafood. As a result, overall Thai shipments to the US may grow within a range of 10-12 percent to approximately USD36.7-37.3 billion during 2021, bettering the 6.4 percent growth projected for 2020. However, if President Trump becomes the US President again, but may not be entitled to run the administration with the majority votes in both the House of Representatives and Senate, it is expected that Thai exports to the US may grow at less than 5 percent to roughly USD35.0 billion in 2021. Most Thai shipments to the US will likely grow at a meager pace, in particular luxury products. If either Biden or President Trump wins the election, Thailand may indirectly be affected by steady capital outflows from China via aggressive US foreign policy towards Beijing. Nevertheless, close attention must be paid to the US-China trade war because it can escalate if President Trump is re-elected.

International Economy