LONDON - Borrowing costs for governments across the world have increased sharply since Donald Trump's U.S. election victory, as investors believe the new president's policies will speed the pace of interest rate increases. Emerging economies have been hardest hit, with fears growing that existing trade deals could be torn up.

Many emerging markets rely on cheap exports, and much of the goods are sold to the United States. It is in these countries that the biggest economic shocks have been felt from the political earthquake in Washington, said analyst David Rees of Capital Economics.

"Effectively, we have seen investors pulling out of emerging markets," Rees said. "Basically, the Trump victory has hit risk appetite, given his fairly vitriolic approach to emerging markets and free trade. And investors have basically taken a flight to safety."

That has meant a major sell-off of risky emerging market debt and currencies, which have seen big losses against the U.S. dollar. If the sell-off continues, the economic pain will start to be felt by ordinary citizens.

"You are going to get lower economic growth, lower jobs growth, lower wage growth, et cetera," as well as "potentially higher interest rates for debt servicing if currencies are falling and inflation pressures are building," Rees said.

FILE - Anthony Riccio, center, works with fellow t
FILE - Anthony Riccio, center, works with fellow traders on the floor of the New York Stock Exchange, Nov. 9, 2016. Investors have been yanking money out of bonds around the world, sending prices tumbling and wiping out several months of gains in widely held U.S. government debt since the election.

Those pressures have forced up bond yields, the interest rate governments have to pay to borrow money, and not only in emerging markets.

In Italy, bond yields hit an 18-month high as the global upward trend was compounded by political uncertainty over an upcoming referendum. That could hit Europe's nascent recovery, said Michael Hewson of CMC Markets.

"I think there is a concern that if bond yields start to edge even higher from where they are now, we could actually see a little bit of a squeeze on borrowing costs of those areas of the European economy in particular that can least afford it," Hewson said.

Mexico's borrowing costs have hit five-year highs following Trump's victory, given his pledge to build a wall on the border and deport millions of illegal immigrants. But Rees said it was unlikely the world would see a return to the "credit crunch" that followed the 2008 financial crisis.

"Obviously, Mexico is quite a special case in terms of its close relationship with the United States and Trump's particular focus," he said. "Elsewhere, yields are still relatively low at the moment, so we are not running into this kind of credit crunch situation."

Analysts said investors had been reassured by Trump's conciliatory tone since the election. But they predicted heavy market losses if he follows through on campaign pledges to tear up global trade deals.