While much of the world was surprised to see an upset victory by President-elect Donald Trump, Zambian-born global economist Dambisa Moyo was among the few who warned that we shouldn’t be surprised if he won.
She noted that Trump may prove to be a jolt to the global economy — and he would fervently agree — even before taking office.
“I do think that the world has been in a very weak economic growth environment with a lot of political unrest around the world. Perhaps we kind of needed a shake to really boost the chances of coming up with something credible longer term,” she told Yahoo Finance Editor-in-Chief Andy Serwer at the annual World Economic Forum in Davos, Switzerland on Tuesday.
Through her conversations with various business leaders at Davos, she said there is a glimmer of optimism, in anticipation that Trump will be able to enact new policies, given that Republicans have taken both the Senate and the House of Representatives. President Barack Obama had even used his final State of the Union address to share that one of his few regrets was “that the rancor and suspicion between the parties has gotten worse instead of better.”
“I think there’s a sense that a lot of the policies that Obama spoke of — infrastructure that was stifled in political gridlock — may actually be drivers of economic growth, pick up in economic growth this year and next year,” she said.
She added a caveat: “Just to be absolutely clear, I’m not saying I’m a big supporter of Donald Trump nor am I saying I’m a supporter of any of the things that he has come out and said that I think most of us find abhorrent … living in the 21st century.”
A few days before the election, on November 1 of last year, she told Yahoo Finance that she did not anticipate a doomsday scenario for the markets regardless of who became president.
“I think people will be surprised but only because the polls showed [Hillary Clinton winning] by a wide margin. I’m not entirely of the mind that the whole world comes to an end [if Trump wins.] We’ll wake up on the ninth and come to work.” What does worry Moyo is that “neither candidate has articulated a very clear idea of the path of economic growth and a lot of the issues we’re dealing with today,” she said.
Despite the positive December jobs report, with wages rising at the fastest pace since the end of the financial crisis, Moyo said she doesn’t view the economy as healthy.
“My personal concern is that we’re not yet seeing evidence that we’re dealing with the structural problems that have continued to erode economic growth — things like investments in education and long term concerns about the health and pension fund bubbles that we’re seeing around the world. Until we address those things, I think we’re still on a long term trajectory of slow economic growth, I’m afraid,” she said.
Still, she said she hopes the populist sentiment of Trump supporters can manifest into a productive economic driver and not just spur protectionism and divisiveness.
“Some people think it’s going to be populist growth or populist protectionism, those are the two tensions. The hope is it’s going to be populist growth as opposed to populist protectionism,” she said.
But for now, she said, there is too much that remains unknown for us to accurately assess how the economy will fare under Trump.
“We simply don’t know what agenda he’s going to implement. We have no idea at this point what happens to taxes, what happens to infrastructure, we’ve been told that there will be a massive stimulus but we’re already seeing a lot of the large fund managers and pension funds deciding they’re going to park money in cash as opposed to invest. [The economy is] still in choppy waters. I think we just need to take a deep breath and wait and see.”
Melody Hahm is a writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Read more from Melody here & follow her on Twitter @melodyhahm.
More from Davos:
Salesforce CEO: I’m not changing how I run my business under Trump
Princeton president: I hope Congress doesn’t tax our endowment
Trump should expect no honeymoon and plenty of impatience: EY CEO
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