The 3T Risks That Alarm Developing Countries... 'Trump, Trade, Turkey'

Trump's Independent Executive Orders Jeopardize US Economic Stimulus
US-China Trade Deal Faces Possible Collapse
Turkey Lira Crisis Could Shake Emerging Markets

[Asia Economy Reporter Naju-seok] Bloomberg reported on the 9th (local time) that three risks starting with the letter T?Trump (Donald Trump, President of the United States), Trade, and Turkey?are weighing heavily on developing countries. Emerging markets can experience significant volatility depending on these three variables.

Regarding President Trump, who is facing a presidential election, he recently introduced an independent stimulus package related to the novel coronavirus infection (COVID-19). Although additional unemployment benefits and payroll tax deferrals require bipartisan agreement, President Trump pushed forward despite controversy over executive overreach. This response by President Trump could further shrink negotiations within the U.S. political sphere, potentially becoming a negative factor for a congressional stimulus package. In a situation where a congressional-level stimulus plan is needed rather than a temporary executive order, President Trump’s unilateral actions could negatively impact the market.

The U.S.-China trade situation is also tense. Both sides have agreed to hold a meeting on the 15th to review the progress of the Phase 1 trade agreement, and the outcome remains to be seen. Previously, the U.S. issued an executive order banning transactions with social networking services (SNS) operated by Chinese companies, such as TikTok and WeChat.

Morgan Stanley pointed out that "the intensification of U.S.-China conflicts could affect not only diplomatic relations but also economic relations and trade agreements."

Turkey could also become a hidden threat to developing countries. Recently, the Turkish currency, the lira, has been plunging day after day. The Turkish lira is continuously hitting record lows, and despite the Turkish Central Bank’s all-out efforts, it has not been able to stop the decline.

The market views problems with the lira as potentially negative for the bond markets of developing countries as well. Investors inevitably operate capital markets by considering "who will collapse next" after Turkey. Investment banks are concerned not only about the Turkish lira but also the South African rand, Brazilian real, and Mexican peso.

This content was produced with the assistance of AI translation services.