BUENOS AIRES Ė The policies advocated by Donald Trump during his successful campaign for the U.S. presidency would have a negative impact on emerging economies, according to a study by Argentinaís Banco Ciudad.
The bankís research department forecasts a reduction in capital flows and more onerous financial conditions for emerging economies as a result of higher interest rates and currency depreciation.
Some foreign portfolio investors are already retreating from emerging economies, the study said, pointing to J.P. Morganís EMBI+ index of risk in emerging economies, which rose 6.65% two days after the U.S. presidential election to 369 basis points.
The risk premium on Mexican bonds surged 15.2%, while rising 11.4% on Brazilís sovereign debt.
The report also noted that the Brazilian, Colombian and Chilean currencies have all fallen against the dollar since Trump upset Hillary Clinton.
Banco Ciudad economists said they expect a more protectionist trade policy out of Washington given Trumpís repeated promises to renegotiate the North American Free Trade Agreement with Mexico and Canada and to impose tariffs on imports from China.