A Donald Trump presidency in the United States could have far-reaching ramifications for personal finance in the Gulf, according to the financial experts at compareit4me.com, the Middle East’s leading financial comparison site.
With the controversial Republican nominee victorious in this week’s United States Presidential Election, markets around the globe have tumbled – $3 trillion has been wiped off the value of global stocks. At the time of release, the United States dollar, which many of the Gulf’s currencies are tied to – had fallen by 3% against the Japanese yen and by 2.1% against the euro.
According to Jon Richards, CEO, the short-term ramifications of the market plunge is that UAE residents will see their dirhams decrease in value against other currencies. However, in the medium term, he said, it could affect UAE residents’ ability to secure credit.
“When markets are jittery, it’s always bad for securing credit – and the shock news that Donald Trump has been elected President of the United States has caused severe market turmoil. Banks in the Middle East could respond to this news by tightening their credit approvals until they work out how the global economy is going to go once Trump is in office,” he said.
“The problem is that no-one knows what’s going to happen – the idea that Trump would actually be elected was unthinkable before Election Day, so there are no plans in place to deal with the fallout. Banks want more certainty when they give out credit, and until they get that, residents in the UAE may have a harder time securing loans, credit cards or mortgages.”
Expats in the UAE could find themselves in a tricky position as a result of a Trump presidency. In particular, he said, American expats may find life more difficult once the outspoken business tycoon takes his place in the Oval Office.
Trump came out with mad policy ideas in the run-up to the election, and if he enacts any of them as President, it could spell bad news for American expats in the Gulf. For example, Trump’s idea of limiting Muslims’ access to the United States would be disastrous for US-Gulf relations – the Gulf countries could retaliate by making it more difficult for American citizens to travel in the region, or by placing credit restrictions on them.
And who knows what might happen if American business interests are threatened in the region? There are plenty of American companies in the Gulf employing tens of thousands of American expats. What happens to those jobs if the business relationships between the US and Gulf countries turn sour? It’s definitely worrying, so we’d advise American expats to put any big spending plans on hold until it’s clear that their ability to work in the Gulf is safe.
UAE residents with investments overseas could see their assets take a beating, thanks to increased volatility in the global stock markets.
We’ve already seen markets tumble as a result of the election result, and there’s no telling how much further the slump will go. This could prove pretty problematic for UAE residents with investments overseas – particularly in the United States. If enough overseas investors are spooked, and decide to take their money out of America and its firms, it could send the value of these investments into free fall.
Echoing my two colleagues, it’s impossible to tell what will happen right now, because Trump is such an unknown quantity. In the short term, that’s bad for business because the world of finance hates uncertainty. We’ll have to wait and see how Trump’s presidency unfolds before we’ll really know what effects he’ll have on the Middle East.