Jessica Cheam
The Straits Times
As the election euphoria from Senator Barack Obama's historic United States presidential election victory subsides, more sober questions are emerging.
For instance, what does the return of the Democrats to the White House after eight years' absence signal for Asia? Will trade protectionism take hold in the US?
Broadly, economists that The Straits Times spoke to agreed Obama's win is a positive outcome for Asia as he is seen to symbolise the change required to turn around the flagging US economy. The world's No 1 economy is a key export market for Asia.
Roman Scott, resident economist at the Singapore British Chamber of Commerce, said most Asians believe Obama will lead a "less belligerent, more consensus-driven White House that is willing to listen and talk".
"His win has a geo-political significance. And economics is tied to geo-political stability, so this is positive for Asia."
However, pre-election campaign talk has fuelled anxiety in Asia that Washington under Obama will embrace more protectionist trade measures.
He has pledged to use US trade laws to press China to allow its currency to revalue, prompting concern on US-China ties.
Beijing was quick yesterday (November 6) to spell out what it expects from an Obama administration. "We hope that the policy of free trade will continue to be adhered to. We must prevent trade protectionism, which is no good for either side," Foreign Ministry spokesman Qin Gang was quoted by AFP as saying.
Obama has also openly opposed a US-South Korea free trade agreement.
Seoul's chief free-trade negotiator Lee Hye Min yesterday urged Obama to honour the agreement. "To try to renegotiate the text when it's been signed and awaiting ratification...you would damage the balance that was achieved when the deal was reached," he told a news briefing, Reuters reported.
Malaysia said it was not yet clear whether a US free-trade agreement will be achievable under Obama, after it failed to reach a deal with the Bush administration, Bloomberg reported.
"We will have to see the policy direction of the new US administration," finance minister Najib Razak said.
An aide on Obama's foreign policy team told The Straits Times that "from an Asean perspective, trade is going to be the big issue. He is a free trader but he also has a domestic constituency that needs to ensure there are safeguards for American workers".
Scott agreed that US domestic policy will be Obama's top priority.
His "buy American" stance could come across as protectionist but, in practice, there will not be too many changes in trade policies with Asia, said Scott.
"You don't want to make enemies in Asia or with China. There's a lot of talk on the yuan, but Bush didn't get very far with that. And I don't think Obama will push this agenda," he said.
OCBC economist Emmanuel Ng added: "Simply put, the US needs China more than China needs the US. So I don't expect a raft of protectionist policies or renewed calls on revaluing the yuan."
Barclays Capital's economist Leong Wai Ho said Obama's response to the financial crisis is vital. "How he manages at home will determine our fates. So far, the signals have been positive."
Citigroup economist Kit Wei Zheng said Obama's willingness to take aggressive fiscal stimulus measures may help to cushion the depth and duration of the likely US recession next year.
"This is a good thing for Asian economies, which are still dependent on the US economy," he added.
CIMB-GK economist Song Seng Wun and economist David Cohen of Action Economics both said the jury is still out on how Asia will be affected.
"We have to see what exactly he's going to do. I wouldn't get overly excited about any radical changes as we're in for a tough period ahead, with the US economy and global economy," said Cohen.
Scott predicts that Singapore's economic growth will come in at 1 to 2 per cent next year, given that its economy is "open and vulnerable to global fall in demand". But he is still bullish on the country's long-term prospects as it has "strong fundamentals" and good policies.Additional reporting by Ravi Velloor and Robin Chan
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