Economist Pau A. Monserrat, a professor at the University of the Balearic Islands and a member of the Economics and Social Council in the Balearics, believes that Donald Trump‘s losses at the US midterm elections are “good news for the Balearic economy“.
He argues that the results signal the end of the Trump era, which will lead to “greater geostrategic security”. “Whoever replaces him will bring more global stability, and that is good for tourism.” Monserrat highlights the critical issue of fuel costs. “If we move away from Trump’s disastrous policies, it is conceivable that the situation with Iran could be resolved, thereby easing the inflation driven by fuel prices. This would make it cheaper for tourists to visit, leaving them with more of a budget to spend once they arrive at their destination.”
Looking ahead, he suggests that all of this could lead to “a decline in inflation, which would allow central banks to loosen their monetary policy, and this, in turn, would cause the Euribor to fall, ultimately resulting in lower mortgage payments”.
Luis García Langa, director of markets at SDC Analistas, does offer some perspective. “There are other regions with far greater interests in the US than our islands have.”
He points out that the US is the world’s leading power; therefore, there could be a ‘spillover’ effect in terms of exchange rates, defence, energy, healthcare, tariffs, and inflation. “If this affects the entire world, it also affects the Balearic Islands, though no differently than it affects anywhere else.”
He believes that during the remaining two years of Trump’s term, key initiatives, such as those concerning the budget, fiscal policy, or critical sectors like artificial intelligence, crypto-assets, healthcare and renewable energy, could potentially stall.
He adds: “The dollar is weakening, though it is unclear if this is merely profit-taking, as a ‘weaker’ Trump could actually lead to a stronger dollar.”